GVK gets more time to repay gas loans

The company said its bankers agreed to let Jegurupadu phase II get an interest rate holiday from January 2014 till March 2016

Hyderabad-based power company GVK has secured relief from bankers on the payment of interest for its gas-based power project. Lack of gas supply had forced the company to shut the project.

The company said its bankers had agreed on an interest payment holiday for the Jegurupadu-phase II project from January 2014 till March 2016. “We had been servicing interest till December. The next repayment will start by October 2016,” said Issac George, chief financial officer, GVK Infra.

 

Bankers are hoping by October 2016, the issue of non-availability of gas to the 217-Mw power plant from the Krishna Godavari basin will be resolved. The loans, the management said, were being given to the power plant on the basis of the 228-Mw phase-I facility that was generating power and was debt-free.

It is securing gas from ONGC’s offshore fields. “These are called liquidity-support loans,” George said.

A senior official of a public sector bank said the lender had given a relaxation to the projects due to “factors beyond control”.

“We hope their problems will be resolved soon,” the banker added.

Last April, many power plants based on natural gas stopped generation, after Reliance Industries’ KG-D6 basin cut production.

GVK also runs another 469-Mw gas-based power plant at Gautami. Earlier, the company had dropped plans of expanding the Jegurupadu and Gautami plants by 800 Mw each, after gas supply turned scarce. Other projects commissioned and awaiting gas include GMR’s 768-Mw facility at Rajahmundry. The company is known to have sought permission from the state power regulator to allow it to recover fixed costs for the project, which will allow it to service debt.

Also languishing from lack of gas are Lanco, Sravanthi Power and China Light & Power India. The VBC group’s Konaseema Gas Power, which runs a 460-Mw unit, is seeing corporate debt restructuring of about Rs 1,400 crore.

 

These power plants can either run the units with naptha or liquified natural gas (LNG), but these increase the price of power produced substantially---the cost of either of these fuels shore up to as much as $14 per million British thermal units. The power distribution company in Andhra Pradesh had refused to buy expensive power.

Reliance Power’s 2,000-Mw plant at Samalot is in talks for gas pooling as well as using imported gas from a yet-to-be-built LNG terminal in the area. The prohibitive cost of power produced from such plans makes these solutions unviable.