Hyderabad: Close on the heels of entering into a gas supply arrangement with Reliance Industries Ltd (RIL) to run a 460MW gas-based plant that was lying idle for years, Hyderabad-based Konaseema Gas Power Ltd, or KGPL, plans to nearly treble its capacity.
M.S.P. Rama Rao, managing director of KGPL, said the company plans to add 820MW capacity at the existing location, Ravulapalem in East Godavari district of Andhra Pradesh, costing some Rs2,782 crore by 2011.
“We have already completed financial closure for the 820MW expansion and also entered into power purchase agreements with five of the power distribution companies in Karnataka to supply by October 2011 some 600MW of power, equivalent to some 75% of expansion capacity,” Rao told Mint, adding that the remaining 220MW would be sold in spot markets as what is called merchant power.
Of the Rs2,782 crore capital outlay for the expansion by KGPL, part of Hyderabad’s diversified VBC Group, some Rs556 crore would be arranged as equity through two group companies—VBC Industries Ltd and VBC Ferro Alloys Ltd—he said.
“We are planning to raise Rs556 crore equity capital through VBC Industries and VBC Ferro Alloys sometime next quarter,” said Rao. The balance Rs2,226 crore was arranged as debt by financial institutions lead by Power Finance Corp. Ltd, the other entities being Life Insurance Corp. of India, Axis Bank, State Bank of Patiala, Infrastructure Leasing and Financial Services Ltd and Dena Bank.
KGPL has on 28 April entered into a gas supply agreement for 2 million cu. m per day with RIL, which began production from its D-6 gas well in the Krishna-Godavari basin in April.