Objectives

Specific targets in terms of physical and financial terms are laid down for all activities Co-ordination in planning There is a basis of control over operational expenses A basis for forecasting profitability and planning for cash/ funds is provided

Coverage
The operations budget is prepared by all the stations that are in the operation phase. The budget is also prepared by the projects for the year in which they plan to commercialise the first generating unit. However, the anticipated revenue and expenditure during the trial run (i.e. from the date of synchronisation to the date of commercial generation) is treated as a part of precommissioning expenses (net) and forms a part of the capital budget.

Key factors
The key factor for the budget estimates shall be the generation level. The generation level should be fixed keeping in view the following : Generating capacity Availability of units Machine condition and overhauling of units Fuel availability Thresh-hold level of generation/ availability to recover the full fixed cost Maximisation of incentives or and minimisation of disincentives

Budget Centres
Each station is a budget centre and hence each station should prepare the budget estimates. The station level budgets are to be consolidated at the region level (RHQ) and then at the Corporate Centre (CC) level to arrive at the company budget. The RHQ and CC would also be budget centers for the activities controlled by them and the expenditure incurred at the RHQ and CC level.

Budget concept
The budget estimates should be prepared by the department/ cost centre responsible for the incurrence of expenditure/ controlling the budgeted activities. The budget estimates should be based on Zero Based Budgeting concept i.e. each and every item of the budget is to be assessed without any reference to the expenditure incurred on this account in the past. The review of the budget should also be based on the concept of zero-based budgeting.

Budget period
The budget is to be prepared on an annual basis for a financial year. The process of preparation of the budget shall start in the month of January and the final approved budget for the next financial year should be in place by the 31st of March. The budget estimates are to be prepared in respect of the following: Revised estimates for the next financial year Budget estimates for the year thereafter

Budget Approval
The budget estimates are reviewed and recommended by the budget committee at the Station and at RHQ and are approved at CC. The approved budget is communicated to the stations. The final budget are phased into monthly targets on the basis of the approved budget.

DEFINITIONS
Installed capacity is the design capacity of generating units in mega watts (MW) available for generating power. Commissioning means the first synchronisation of the boiler with the turbine. Commercial generation is the date from which a unit is considered as stabilised and capable of generating energy on commercial basis. The start of revenue operations is reckoned from this date. Gross calorific value (GCV) is the heat content per unit of inputs like coal, oil, gas, etc and is represented as Kcal/Kg, ML or CM.

 Calories input (Kcal) is the total input of heat energy from coal or oil or both for heating water/steam in the boiler in a given period in the case of thermal stations. In case of gas stations, the calories input is the total input of the heat energy from gas and liquid fuels. It is worked out by multiplying calorific value of inputs by quantity consumed in a period.

 Heat rate is the heat in Kcal required to generate one Kwh of electrical energy. It includes the following in case of coal stations: (i) Coal consumed in kg/kwh is converted into kcal by multiplying with GCV of coal (ii) Heat due to oil consumption in Kcal. In the case of gas stations, the heat rate is obtained by converting the gas consumed in cm/kwh into kcal by multiplying with the calorific value of gas and the liquid fuel in Kl into Kcal by multiplying with the calorific value of liquid fuel.

 Declared capacity (DC) in relation to a generating station means, the capability to deliver ex-bus electricity in MW declared by such generating station in relation to any time-block of the day or whole of the day, duly taking into account the availability of fuel or water, infirm power means electricity injected into the grid prior to the commercial operation of a unit or block of the generating station;

 scheduled generation or SG' at any time or for any period or time-block means schedule of generation in MW or MWh ex-bus, given by the concerned Load despatch Centre; Unscheduled Interchange in a time-block for a generating station or a seller means its total actual generation minus its total scheduled generation and for a beneficiary or buyer means its total actual drawal minus its total scheduled drawal.

BUDGETING AT THE STATION LEVEL

The stations are responsible for providing the following information : Operating parameters Fuel expenditure O&M expenditure i.e. employees, repairs & maintenance and overheads Depreciation Working capital (other than debtors) Miscellaneous income Other Finance charges (excluding rebates)

 The following aspects are not controlled at the station level and therefore are not required to be budgeted by the station. However, the station is to incorporate the following information provided by RHQ/CC: Interest budget Debtors budget

Responsibility for budget preparation

Each department should prepare the budget for the activities that they are responsible and accountable for including related areas of work. For example: Mechanical maintenance department should prepare the budget for repairs and maintenance for the various cost centres/ sub-cost centres (such as Boiler, Ash Handling Plant, Coal Handling Plant, etc.) HR department should prepare the employee related expenditure budgets (relating to salaries, LTC, medical, travel, training, etc), general administration expenditure (hire charges, security expenses, stationary, electricity, postage, guest house expenses, etc) Town Administration department to prepare budgets for the relevant sub cost centres like horticulture, maintenance of residential quarters, roads, etc

responsibility for co-ordinating

Maintenance Planning Section (MTP) and Operation and Efficiency Section (O&E) These sections are responsible for the co-ordination of the budget process of all O&M sections. They are to prepare the Operating parameters budget (physical budget) and also to examine / review the budget proposals made by the O&M sections. F&A Department The F&A department is responsible for co-ordinating the entire budget preparation exercise (including the budget preparation exercise by the nonO&M departments). Its responsibilities include:

 Distribution of the budget circular to initiate the budgeting process Co-ordination with the O&E and MTP sections with respect to preparation of the budgets for the O&M departments Interacting with the non-O&M departments for setting up the targets Compilation of the budgets prepared by the various departments and presentation to the various committees for deliberation and approval Co-ordinate , compile and submit final budget along with monthly phasing Communication of the final budget to the various departments