GVKPIL has put the expansion of two gas-based power projects ? Gautami Power II and Jegurupadu III ? estimated at Rs 6,000 crore, on hold due to uncertainties over gas supply by Reliance Industries .
?GVK is currently pinning its hopes on the re-gasified liquefied natural gas (R-LNG ) being supplied by the state government, which is expected to stop after May 2011. In the absence of assured gas the company had decided to put the expansion on hold,? said a person having direct knowledge of the development.
The company has so far invested over Rs 200 crore in securing land and giving advance to the contractors for the two projects. GVK CFO Isaac George could not be reached for comment. The Hyderabad -based company had earlier planned to set up the second phase of its gasbased power project, Gautami II, with a capacity of 800MW in Andhra Pradesh. The company had secured all approvals and made arrangements for land, water and other requirements.
The first unit of the project is scheduled to go into commercial operation in the first quarter of 2013. ?Shortage of natural gas supplies and subsequent delay in testing its new Gautami Power plant is significantly escalating the costs for GVK, thereby making it unviable,? said a person having direct knowledge of the development. The company had earlier said the gas supply for the Gautami power project would be ensured from Reliance?s KG basin field, which has also been supplying gas for the 464-MW unit of the Gautami plant. ?Power purchase agreements for the project have also been signed with Southern states and Maharashtra,? it said.
Similarly , GVK?s planned expansion of its Jegurupadu project (Phase III) in Andhra Pradesh has also been put on the back burner. The proposed 800-MW project was announced in January and was expected to go on stream in the next 36 months. The infrastructure company has also started cancelling orders given to vendors for both power plants. Last year, it had entered into an agreement with a consortium that included Hyundai Engineering Company and Larsen & Toubro to construct the Jegurupadu-based power plant. Early this year, GVK had awarded contracts to Alstom to build two units in the East Godavari District in Andhra Pradesh. ?The company has asked Alstom to return the advance,? said another person close to development.
GVKPIL operates about 1,178-MW gas-based combined cycle power plants in Andhra Pradesh supplied by Reliance from its Krishna-Godavari basin. The capacities are spread between Jegurupadu I (235 MW), Jegurupadu II (479 MW) and Gautami Power (464 MW), all located in Andhra Pradesh. The company has already taken a hit on its power business with gas supplies from Reliance turning unpredictable. The power units, which were operating at about 90% PLFs, have slipped on generation to operate at about 75% of the capacity. ?GVK has been facing problems in gas supplies since November last year and the impact of shortage in supplies has affected its power generation in the fourth quarter of the last fiscal.
If the gas supplies continue to be low, the company will take a big hit on its power business,? said an analyst form a Mumbai based broking firm Infrastructure companies buying gas from Reliance have been facing problems because the energy giant has been pumping less from its D6 block in the Krishna-Godawari basin than it did last year. Last month, Reliance warned the country?s upstream regulator that production from the field could drop further. Reliance has been maintaining the gas output under 50 mmcmd as against the earlier peak of about 61 mmcmd. This was mainly on account of serious reservoir (water) issues as well as water entering wells, sand interference and pressure depletion.
(economictimes)
Source: economictimes, May 13, 2011; Image: gvk
Source: http://www.lngworldnews.com/india-gvkpil-puts-two-gas-power-projects-on-hold/
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