Andhra Pradesh govt to take over GVK’s 217 MW phase-1 Jegurupadu plant

Hyderabad: The Andhra Pradesh government has decided to buy out a 217 MW power plant operated by GVK Power and Infrastructure Ltd in the state since 1997, citing provisions of the power purchase agreement (PPA).
The Hyderabad-based company said in a statement that it has received notices in this respect from the government to buy out the Jegurupadu phase-1 gas-based power plant.
GVK signed the PPA with Andhra Pradesh State Electricity Board (APSEB) in April 1996 to set up a 400 MW combined cycle gas-based power station at Jegurupadu village in East Godavari district of Andhra Pradesh. The first stage of 217 MW was commissioned in 1997. The plant has 0.75 million cubic meters per day (mcmd) gas allocation, which was supplied by GAIL India Ltd.
GVK said the PPA signed with the erstwhile Andhra Pradesh State Electricity Board (now AP Transco) completed its validity period of 18 years and expired on 20 June.
“As per the agreement, the government has the ability to buy us out after the contract period is over,” Isaac George, chief financial officer of GVK group said over the phone, adding “They will have to pay the terminal value of the plant.”
GVK said it has invested about `1,125 crore in the project and have claims from the government to be settled.
George did not specify the total claim amount.
Currently, the plant runs at 30% capacity utilisation due to limited gas supply from the Krishna-Godavari basin.
“We have issued a buyout notice; there is a timeframe of 60 days (to close the deal), and tentatively, they have given us a figure, which has to be evaluated before taking a final view,” said K. Vijayanand, chairman and managing director of Andhra Pradesh Generation Corp. Ltd (Apgenco) over the phone.
Grant Thornton, hired by Apgenco as independent consultant, has valued the project at `370 crore, Vijayanand said.
Vijayanand said the government is yet to decide on whether it will run the plan on its own or lease out to another firm.
“The first step will be to close the buyout transaction, and then it’s up to the two distribution companies on what best can be done with the plant,” Vijayanand said.
Andhra Pradesh Eastern Power Distribution Corp. Ltd and Southern Power Distribution Co. of Andhra Pradesh Ltd will jointly own the plant once the transaction is closed.
Out of GVK’s three gas-based projects, Jegurupadu phase I is the only operating project with revenues of `290.40 crore for the year ended 31 March.
Shares of GVK rose 4.72% to close at `8.43 on the BSE on Monday, while the benchmark Sensex gained 1.52% to close at 27,730.21 points.
Source: Mint; 22 June 2015
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