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GPPC-Swan deal raises political storm

BS Reporter  |  Mumbai/ Ahmedabad 

The recent decision by the state government to offload 49 per cent stake in state-owned GSPC Power Company (GPPC) to Mumbai-based Swan Energy for Rs 381 crore has assumed political overtones with the state Congress questioning the rationale behind the deal, demanding to even scrap it.

Leader of Opposition, Gujarat Assembly, Shaktisinh Gohil today alleged at a press conference that Gujarat government had given away GPPL to Swan Energy on nearly a platter. Gohil said that the private player would be able to about twice-thrice the deal amount as it has a right to sell 70 per cent of the carbon credits for a period of ten years.

This newspaper has recently reported that Swan would be in a position to rake in about Rs 700-800 crore from carbon credits sale. Drawing comparisons with valuations of other power companies, Congress alleged that equity worth Rs 260 per share was given to Swan for just Rs 37 per share. The deal values GPPL at about Rs 778 crore while it is commissioning 702 MW of gas based power generation capacity, according to a media statement. GPPL has plans to ramp up this capacity to 1050 MW subsequently. Besides this, GPPL has been roped in by the state government to convert three of its power plants from coal to gas and garner precious carbon credit.

The power project of GPPC is nearing completion and according to the official version of the Gujarat government, issued recently, the power project is scheduled to be commissioned in December 2010, Gohil said. This means the technology was finalized long ago, loans tied up, financial closure achieved, environmental clearance obtained, fuel linkage established and long term power sale agreement executed with buyers, he added.

“Also, the state government preferred to divest its interests from GPPL ahead of proposed IPO of GSPC,” according to Gohil.

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First Published: Thu, February 11 2010. 00:13 IST
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