Coal and natural gas shortage has forced private power producer GVK Power and Infrastructure Ltd to put on hold its expansion plans in Andhra Pradesh, where its existing gas-based projects are also badly hit, an official said Wednesday.
The existing plants in the state are operating at a plant load factor (PLF) of below 25 percent due to severe shortage of gas as the production in Krishna-Godavari Basin has come down by 70 percent, according to Krishna Ram Bhupal, managing director, GVK Power.
The shortage of coal also appeared to have forced GVK Power to drop its plans to build a thermal power project with domestic coal. It will be now build only one thermal project with coal imported from its Hancock coal mines in Queensland, Australia.
GVK Group had acquired the coal mines from Australia-based Hancock Prospecting last year for about $1.26 billion.
In January, GVK Energy Ltd, a subsidiary of GVK Power, announced that it would invest Rs.40,000 crore to produce 6,400 MW electricity in Andhra Pradesh.
The firm had signed four memorandums of understanding with the state government for four projects - two coal-based power projects of 2,640 MW each and for increasing capacity of the two existing gas-based projects.
The company had then announced that one project will be Indian coal based and the other will use imported coal.
Ram Bhupal said three of the projects would be gas-based and the fourth one would be a thermal project, for which they planned to import coal from Australia.
“The thermal project will be ready in three to four years and the moment coal is available, we will ship it from Queensland,” he told reporters on the sidelines of a conference of the Confederation of Indian Industry (CII) here.
For the proposed thermal project, whose capacity can range from 1,320-2,640 MW, the company had identified the land and all the contracts were also in place, he added.
“Even if you sign fuel supply agreement with Coal India, you will get only 60 percent of the allocated coal. It makes no sense for anybody to go ahead with new project. When you invest Rs.5,000 crore, the banks are not going to consider this agreement which you sign with Coal India. It is better for us to wait for Hancock coal mines to become operational and get the coal to India and build projects,” he said.
The existing gas-based plants Jegurupadu Phase I and Phase II and Gautami are running at below 25 percent PLF.
“When PLF is and capacity utilisation is very very low, it makes no sense in going for the new project. Solve the gas problem for the existing and then talk of expansion,” he said.
GVK had plans to expand Gautami project to about 800 MW from the existing 464 MW and Jegurupadu project to 800 MW from 479 MW.
Later, addressing the conference, Ram Bhupal voiced concern over the serious shortage of gas for the power projects and warned that if the problem was not addressed in the next two to three months, projects worth 20,000 MW in the country may go out of production.
He said this would aggravate the situation especially in the southern states which were already reeling under a crisis.
On the 540 MW Goindwal Sahib thermal power project at Tarn Taran in Punjab, Ram Bhupal said that it would be commissioned in March-April 2014. The coal for this project will be sourced from the company’s captive mine at Tokisud in Jharkhand.