GMR Infrastructure has put the development of its Rs 7,000-crore power project at Shahdol, Madhya Pradesh, on the backburner, thanks to coal shortages.
The company acquired this 1,370-Mw project from SKJ Powergen in 2009. It was to be commissioned in 2014.
“Private power producers are so much bruised on Thursday, they do not dare to set up anything new. No one can put up any capacity in this kind of situation,” said A Subba Rao, chief financial officer of GMR.
The Union government recently gave a coal supply assurance to power producers and directed state-owned Coal India to go ahead and sign fuel supply agreements (FSAs). Rao says he’ll wait for implementation of these assurances.
Yet another 1,370-Mw coal-based power project GMR is developing in Raipur, Chhattisgarh, is yet to get an FSA. The company says this project is on the priority list, as the government said fuel would certainly be given for projects commissioned before 2015-16. The project is expected to be commissioned by 2013-14.
“I will not be be worried if the FSA does not come in the next one year. But as long as there is visibility that Coal India would sign an FSA by the time we commission the project, that’s good enough for us,” said Rao. Even as policy clarity and directions have come, the company is waiting for implementation clarity before proceeding.
GMR is not the only power company to have made this decision. Issues related to coal, water and power purchase agreements have made Larsen & Toubro scale down its plans, too. Two years before, it planned to set up as much as 6,000 Mw; now, it is concentrating on putting up only the 1,600-Mw Rajpura power project in Punjab. Tata Power said planning of two projects, the 1,600-Mw Dehrand in Maharashtra’s Raigad district, and Naraj Marthapur (2,000 Mw) in Odisha’s Cuttack district, are delayed as they are fraught with land acquisition worries. Adani, too, froze plans to set-up as much as 6,000 Mw of capacity.
Like other power companies, GMR is going ahead with the commissioning of its current portfolio. As a result, it will add 2,418 Mw of capacity in the next six months. It is setting up a 600-Mw unit at Vadodara from a project it acquired from Emco, 1,050 Mw at Kamalanga in Orissa, and 768 Mw of gas capacity in Rajahmundry. GMR is still awaiting a nod from the government for fuel supply for its gas-based power project. Without gas, the project cannot achieve a commercial date of operation. The unit awaits gas even for trial runs. “We are just waiting at the government's door to see what they will do,” said Rao.
The company raised two rounds of private equity capital in the power subsidiary in 2010 and had originally planned an Initial Public Offer. The plans were thwarted on two counts, volatile capital markets and bad news around the infrastructure sector. “We don't have any plans to raise capital for six months. If the fuel scenario improves in the next six months, we will see how we do,” said Rao. The company has already mobilised funds for most of the projects under development and will have no fresh requirement for another year, he said.
