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Two distribution companies of Andhra Pradesh have issued a “Buy-out” notice to the country’s first private independent power plant — the 217 MW Jegurupadu project of GVK Power & Infrastructure Limited.
PPA expiry Both the AP Southern Power Distribution Company Limited and AP Eastern Power Distribution Company Limited have expressed their intent to buy-out its power purchase agreement expiring on June 19, completing its 18-year tenure.
K Vijayanand, Chairman and Managing Director of AP Genco, told BusinessLine , “GVK has been issued a notice for buy-out after we concluded a due diligence process, by engaging the services of independent consultant Grant Thornton, and later securing nod from the State Government.”
Project value The consultant has valued the project at ₹370 crore, which includes ₹76 crore for some related assets and stocks.
They will be provided 60 days time for their response and to conclude the process, he said.
There are three options for the project after the PPA expiry — buy-out, opt for refurbishment, and third, return of the plant to the owner.
While GVK has estimated the cost of refurbishment at about ₹550-600 crore, AP Genco feels it could be lower as it has experience of running a gas-based power plant.
Isaac A George, Group CFO, GVK, had recently told BusinessLine , “They invested about ₹1,125 crore on the project and we have some claims from the Government to be settled. The terminal value has been pegged at ₹294 crore.”
Significantly, with the PPA expiring, the State has directed GVK to continue to generate power and supply to Andhra Pradesh.
Telangana interest It is learnt that Telangana is also keen to buy out the project as it would find it equally attractive to take over such an asset created in unified AP. But AP contends that since it is in its jurisdiction it would acquire it.
The plant is currently getting gas enough to run it at 30 per cent plant load factor. With the Centre making an arrangement for pooled gas, AP expects it may be able to run at a higher capacity.
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