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Hyderabad-based power company GVK is getting an interest payment relief from its bankers for its gas-based power project. Lack of gas supply has forced the project to shut capacity. The company said its bankers agreed to let Jegurupadu phase II get an interest rate holiday 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, in a analyst conference call.

The bankers hope that by then the issue of non-availability of gas from the Krishna Godavari basin to the 217 megawatts power plant would be resolved. These loans, the management said, were being given to the power plant, on the strength of the 228 megawatt first phase which is currently generating power and is a debt-free company. It is getting gas from ONGC's offshore fields.

 “These are called liquidity support loans,” George explained. Many power plants which fire on natural gas stopped generation in last April after Reliance Industries' KGD6 basin, cut its production. A top banker of a state-owned public sector bank said they have given some relaxations to some projects due to 'factors beyond  the control'. “We hope their problems will be sorted soon,” the banker said. GVK also runs yet another 469 megawatts gas-based power plant at Gautami. It cancelled its plans of expanding both Jegurupadu and Gautami by 800 megawatts each, after gas availability became scarce. 

Some of the other projects which have commissioned and have been waiting for gas include the newly commissioned units of 768 megawatts at Rajamundry, by GMR. As projects are commissioned, they will have to start servicing debt. The newly-commissioned project unfortunately, have started off with no gas and a debt burden to service. The company is also known to have sought a permission from the state power regulator to let them recover fixed costs for the project, which will allow them to service debt. Also languishing from lack of gas are Lanco, Sravanthi Power and China Light & Power India. Yet another power plant called Konaseema Gas that runs a 460 megawatt power unit, is in the process of corporate debt restructuring (CDR) of around INR 1,400 crore.

These power plants have the option of running the units either with naptha or liquified natural gas (LNG), but that would drastically increase the price of power produced. The AP's power distribution company refused to buy expensive power as the cost of either of the fuels would shore up to as much as $14 per mmbtu. Many companies including that of Reliance Power's 2,000 megawatt plant at Samalot have been talking of possible 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 unusable options.

Source-On Request