The Hindu Business Line : GVK Power set to acquire two power projects

Hyderabad, Dec. 6 Following the restructure of the holding company, GVK Power & Infrastructure Ltd (GVKPIL) is engaged in parleys to acquire two coal-fired power projects of 600 MW and 1000 MW each.

“We are in negotiations for buyout of interest of developers of these two projects. Since the market conditions have changed, we are looking at more attractive valuations and discussions are on,” Mr G.V.K. Reddy, Chairman of GVK group, told Business Line.

“As we are witness to very volatile capital and financial markets, where funding is hard to come by, we believe that the GVK group is better placed in such a market to make the right moves, including acquisition of two power projects, one of them with coal mines,” he said.

“The power holding company is debt free and we have the ability to access funds for the buyout by possibly offering equity in the existing projects,” he explained. However, Mr Reddy refrained from divulging the names of the two projects which the GVKPIL is now in pursuit due to non disclosure terms.

“The GVK group is no exception to the current market conditions where it is relatively difficult to raise funds. However, most of the power and infrastructure projects we are undertaking have achieved financial closure. The overall investments under execution are about Rs 15,000 crore,” he said.

“We are also in discussions to divest stake in some highway projects to part fund implementation of other projects,” he said.

GAS FROM KG WELLS

Referring to the company interest in power sector, Mr Reddy said the GVK Jegurpadu Extension and Gauthami projects have been completed and gas supplies from the Reliance’s KG wells are likely in January 2009.

“Even though we completed these projects much ahead of time, we could not run them due to gas linkage. Reliance is already extracting crude from the KG wells and has indicated that they will supply gas early 2009,” he said. The two hydel projects under execution are at different stages. For Alaknanda, the company has tied up finances and the project is in full swing. This is run of the river project, where for about six months it is faced with snow.

MERCHANT POWER

For the two merchant power projects at Goregaon 200 MW and 170 MW, respectively, preliminary work is under way. The company is in the process of laying a 30-km road for these projects, he said.

Referring to the 560-MW Goindwal Sahib, Mr Reddy said the company has placed orders for the equipment with BHEL and is awaiting regulatory approval for entering into power purchase agreement.