GVK gets in-principle approval to generate gas-fuelled power

GVK gets in-principle approval to generate gas-fuelled power
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First Published: Mon, May 12 2008. 12 24 AM IST
Updated: Mon, May 12 2008. 12 24 AM IST
Hyderabad: The Union government has agreed in principle to allow diversified infrastructure company GVK Power and Infrastructure Ltd to set up gas-fired power plants of 1,500MW, electricity from which it could sell in the open market, its top official said.
“The government has now approved in principle our proposal to add 1,500MW of gas-based power generation capacity,” chairman G.V. Krishna Reddy told Mint. The fresh capacity could cost the company Rs6,000 crore in capital costs.
This approval seeks to compensate for the losses the company suffered for want of natural gas supply, he said. State-owned GAIL (India) Ltd had agreed to supply gas, but failed to do so due to a shortage in the Krishna-Godavari basin off India’s east coast.
The GVK group’s chief financial officer Issac A. George said two of the company’s gas-based power projects—220MW Jegurupadu phase II project and 464MW Gautami power project, both in Andhra Pradesh—remained idle for close to two years for want of natural gas.
The company has a power portfolio of 2,140MW, with 900MW completed, 330MW being implemented, 540MW ready for financial closure, and 370MW at the early stages of development.
The company would enter the merchant power business through the 370MW Goriganga Hydro Power Pvt. Ltd it will build in the Pithoragarh district of Uttarakhand by 2012. It would have to supply 12% of the capacity to the state and will be free to sell the rest to any third party, Reddy said.
George said the company proposes to add 1,000MW of capacity at Gautami and 500MW at Jegurupadu. “We are going to begin brownfield expansion shortly. It should take 30-36 months to complete these two expansion programmes,” he said.
GVK proposes a 80:20 debt-equity ratio for the expansion and expects to achieve financial closure in the next six months or so. “We have already tied up with Reliance Industries Ltd for gas supplies,” George said.
Reddy, however, said the firm will focus more on coal-fired projects since it is acquiring coal mines overseas.
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First Published: Mon, May 12 2008. 12 24 AM IST