BERC Regulations 15Chapter 2 · Financial Principles

Section 15 · Depreciation

(1)

The value base for the purpose of depreciation shall be the Capital Cost of the asset admitted by the Commission. The Salvage value of the asset shall be considered as 10 Percent and depreciation shall be allowed up to maximum of 90 Percent of the Capital Cost of the asset.

(2)

Depreciation per annum shall be based on 'Differential Depreciation Approach' over loan tenure and period beyond loan tenure over useful life computed on 'Straight Line Method'. The depreciation rate for the first 10 years of the Tariff Period shall be 7 Percent per annum and the remaining depreciation shall be spread over the remaining useful life of the project from 11th year onwards.

(3)

Depreciation shall be chargeable from the first year of commercial operation. Provided that in case of commercial operation of the asset for part of the year, depreciation shall be charged on pro rata basis.

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