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Credit profile turns weak as inadequate gas supplies hit operations
Woes of power sector seem to be just growing by days. Andhra Pradesh based 460 MW Konaseema Gas Power, a project promoted by VBC group, is heading for corporate debt restructuring.
Senior public sector bank executive said the power project has been hit by the delay in the availability of natural gas. Besides, long idling of plant (over three years) has also impacted the company. It would be taken for consideration this week.
The total debt exposure of lenders is in excess of Rs 1,400 crore. With IDBI Bank having exposure of over Rs 297 crore and Power Finance Corporation just over Rs 360 crore.
Konaseema is natural gas based combined cycle power plant at Ravulapalam, near Rajahmundry in the East Godavari district. The capital cost of the project is Rs 1,800 crore ($ 450 Million), according to company website.
M S P Rama Rao, its managing director, said Gas supplies are down. The government has prioritized gas supplies with fertiliser projects coming on top. The power plant gets 30 per cent of required supplies.
The company has been paying interest on loans on time. "We are seeking payment holiday on principal for two years. There is no demand for any scarify, he said.
The Plant consists of two gas turbine generators from SIEMENS of Germany. The Gas turbines have the capability of firing liquid fuel as alternate fuel in exigencies.
Konaseema has power purchase agreement with AP-based power companies for paying conversion charges of 90 paisa per unit and Rs 1.80 per unit for fuel. The merchant power producers get higher amount for fuel costs, giving them edge over us, Rao said.
The gas supply scenario is expected to improve only after two years once port terminals (for imported natural gas) at Kakinada and Gangavaram on East Coast become operational.
IL&FS Investment Managers and AMP, both private equity funds, has made investment into the Konaseema project. They hold under 10 per cent stake in the company.
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