Vemagiri to generate power till Reliance production begins

The Andhra Pradesh government's move to divert natural gas supplies to the Vemagiri power project from January 2008 year has come as a big relief to the GMR group. The group now hopes to run the project till the production of Reliance gas begins in June-July next year.

The government on Wednesday had said it would approach the Centre for diverting the gas meant for Lanco Group's Kondapalli project in Vijayawada to Vemagiri near Kakinada as part of its efforts to enhance the availability of power during the ensuing rabi season.

"While the state government in its letter has indicated that this arrangement is for a four-month period beginning January-April next year, we may run the plant on the same lines in May and June too since the energy demand during these two months stays high normally," Raj Kumar, chief executive officer, GMR Energy Limited, told Business Standard.

The Vemagiri project was lying idle since its completion more than a year ago and would had to face status quo till June-July 2008 had the state government not take the decision to divert the natural gas supplies.

The Lanco Group agreed as the government assured the company that it can run the plant on naphtha.

The current gas supplies, which are around 70 per cent of the normal requirement, once diverted would allow Vemagiri to generate 230-240 Mw power as compared with its total installed capacity of 390 Mw, according to Raj Kumar. The project has a 23-year power purchase agreement (PPA) with the Andhra Pradesh Transmission Corporation (APTransco).

Meanwhile, the company is also actively pursuing its proposal to shift its barge mounted 220Mw gas power project to Kakinada from Mangalore in Karnataka. "We consider it as a proper option since the required gas to run the plant is going to be available at Kakinada from next year onwards," he said. However, he added that this shift may not be possible before 2009 as putting necessary infrastructure in place would take some time. The plant is currently running on naphtha at Mangalore.

GMR is currently developing two 1,000 Mw coal-based power projects, one in Orissa and the other one in Chhattisgarh. Besides, it has bid for two more coal power projects of 1,500 Mw and 1,600 Mw in Chhattisgarh and Maharashtra respectively. In addition, three hydel projects with a total capacity of 640 Mw are being taken up by group in Uttarakhand, Himachal Pradesh and Arunachal Pradesh.

The company has also bid for two projects with a total capacity of 800 Mw in Nepal, according to Raj Kumar.