AP Transco likely to buy out GVK Power's Jegurupadu plant.

GVK Power & Infrastructure Ltd's the 217-MW Jegurupadu project is likely to be bought out by Andhra Pradesh utility as the sun sets on the 18-year power purchase agreement.

GVK Industries Ltd., a step down subsidiary of the company, had entered into an agreement with the erstwhile Andhra Pradesh State Electricity Board (now AP Transco) for this purpose.

The PPA had completed its validity period of 18 years on June 20, and GVK Industries has received a notice from the AP Transco stating that they have exercised their option to 'Buy Out' its 217 MW (Phase 1) power plant situated at Jegurupadu Village near Rajahmundry in the east Godavari district of Andhra Pradesh.

'As per the terms of the provisions specified under the PPA, after the expiry of the 18-year period, the State has the right to buyout the project. Accordingly, they have served a notice to acquire the project. Due diligence of the project was conducted by an independent consultant Grant Thornton and the project has been valued as per the current value,' Isaac A George, Chief Financial Officer of GVK Power, told BusinessLine.

The PPA provides for either sale of the project to the State or overhaul it and run it by entering into a new PPA or the other option is to allow the private developer to continue with the project. 'They have a right to buyout the project after the expiry of the PPA. We had invested about Rs. 1,025 crore in the project. The independent agency has valued the project at Rs. 294 crore plus about Rs. 76 crore for other infrastructure. We have certain claims to be settled with the State and the matter has to be decided by the electricity regulator,' George explained.

These include completed capital cost, tariff-related payments and others.

Though the exact amount has to be calculated, it is now for the regulator to decide and accordingly the State would have to pay that up, he said.

Asked, if they received any interest from Telangana, George said no such notice was received by them.


HBL