Lenders rejig stranded GMR Rajahmundry Energy project debt

GMR Rajahmundry Energy Ltd has announced its Strategic Debt Restructure with lenders taking 55 per cent of the equity as per the RBI norms.

A subsidiary of GMR infrastructure Ltd, the Rajahmundry unit is faced with no long term fuel supply agreement and long term power purchase agreement. This has resulted in the consortium of lenders of the energy unit to adopt the strategic debt restructure late last week.

As per the scheme, of the total outstanding debt, including overdue interest of Rs 3,780 crore, debt of Rs 1,414 crore has been converted into equity by which the consortium of lenders would have 55 per cent shareholding and balance 45 per cent would be held by GMR.

After the conversion, balance debt of Rs 2,366 crore would have a repayment period of 20.5 years including a moratorium of 1.75 years and interest rate of 10.75 per cent. After the debt restructure, the project will have total equity of Rs 2,571 crore.

GMR Rajahmundry Energy Ltd is a 768 MW (2x384 MW) natural gas power plant located in Andhra Pradesh. While it was completed in 2012, its commissioning was delayed due to non-availability of gas supply and unprecedented fall in gas production from KG-D6. This resulted in cost overruns, even though the project was commissioned in October 2015.

Under the e-RLNG bid scheme of the Government for stranded gas power plants, the unit has supply for both phase II and III of bidding. In Phase II, the plant will receive gas from GAIL to operate at 30 per cent plant load factor and the entire power supply would be to Discoms in Andhra Pradesh as per power purchase agreement.

According to GMR, the lower debt levels coupled with reduction in interest cost would result in improving the long term viability of the project.

GMR Infrastructure Ltd has earlier last week announced strategic investment of $300 million from Tenaga Nasional Berhad, Malaysia into GMR Energy Ltd.

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