After the 2016 divestment of the 217 MW Unit I of the Jegurupadu gas-fire power plant, GVK Power & Infrastructure Ltd has now decided to divest the 228 MW Unit II and possibly sell other gas plants under the company portfolio.
The decision to divest Unit II, which has a debt of ₹480 crore on its books, was taken in the backdrop of the lack of clarity on fuel linkages to run the plants in spite of waiting for several years, GVK Reddy, Founder-Chairman of GVK, said.
“We continue to incur losses and the plant is lying idle for several quarters. Even the fixed cost, which the government has to provide when the plants are idle due to lack of fuel, is not being provided. The finances of the project and company are stretched due to this. Therefore, we felt we could divest it and focus on other projects,” he said. Unit I, the first gas-based plant to be set up in the country after the liberalisation of 1991, was divested to the Andhra Pradesh discoms for ₹261 crore in April 2016 after the project completed its power purchase agreement (PPA) term of 18 years.
The PPA terms provide for first right of refusal to the AP government, and it exercised its right.
In talks with AP govt The company has initiated talks with the Andhra Pradesh government for sale of the second unit, a combined cycle plant, which has agreements with AP and Telangana discoms. Another round of talks is likely in the first week of October to take the proposal forward.
Given the continued uncertainty that power developers have been facing due to lack of fuel linkage for completed projects, GVK is also mulling divestment of its other gas-based power project, the 469-MW Gauthami Power plant, also located in Andhra Pradesh, which has been stranded owing to failure to secure linkage.