GVK's Power Projects Cleared as Punjab Formulates New Industrial Policy

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Researched by Industrial Info Resources (Sugar Land, Texas)--GVK Power & Infrastructure Limited (Secunderabad, Andhra Pradesh), a part of the diversified GVK Group, has received clearance from the Punjab State Electricity Regulatory Commission to develop a 540-megawatt (MW) thermal power plant in Goindwal Sahib with an estimated investment of $655 million. GVK will set up two 270 MW units at the site.

GVK had received clearance from the state government in its last tenure to set up a 500 MW thermal power plant, comprising two units of 250 MW each, at the site. GVK had planned to use standard 250 MW units from Bharat Heavy Electricals Limited (BHEL) (New Delhi). The capacity of these units has now been increased to 270 MW each. BHEL has informed the regulatory commission that the module used for the new 270 MW units is the same as that used for the older 250 MW units. The turbine internals have been remodeled to boost steam-handling capacity for greater power generation. BHEL will redesign the boiler for this increased capacity and modify the process flow pattern for the increased generation brought about by the altered turbine design.

GVK has already placed orders for the boilers, generators and turbines from BHEL at a total cost of $267.5 million. BHEL will also supply accessories and other materials at an additional cost of $251 million, 79% of the total project cost. Land and interest costs respectively account for 4% and 11% of the capital cost, and an additional sum of $8.75 million has been allocated for the rail siding.

GVK is also in the process of setting up gas-fired power plants of 1,500 MW in Andhra Pradesh with an investment of $1.5 billion. The approval from the state government of Andhra Pradesh for this project is to compensate for the losses suffered by GVK in previous power projects in the state: the 464 MW Gautami Power Project and Phase II of the 220 MW Jegurupadu Power Project, which were stalled for nearly two years because of the scarcity of natural gas in the Krishna-Godavari Basin off of India's east coast. GVK now plans to expand capacities by 1,000 MW at Gautami and by 500 MW at Jegurupadu and has teamed up with Reliance Industries Limited (Mumbai) for gas supplies. These brownfield expansions will commence shortly and will take 30 to 36 months to complete.

GVK will make a foray into the merchant power business through the proposed 370-MW Goriganga Hydropower Project in the Pithoragarh District of Uttarakhand. This is slated to be commissioned by 2012. GVK will supply 12% of the power generated to the state and sell the remainder to a third party. The company's power portfolio of 2,140 MW comprises 900 MW of commissioned generating capacity, 330 MW under implementation, 540 MW slated for financial closure, and 370 MW in the early stages of development. The firm is acquiring coal mines overseas and will focus on coal-fired power projects.

The state government of Punjab is in the process of formulating a new industrial policy in collaboration with representatives from small-, medium- and large-scale industries. The focus is on execution of new power projects to increase the state's power generation capacity by 5,000 MW to 6,000 MW over the next five years. Two super thermal power stations are being set up: a 1,200 MW plant at Rajpura and a 1,800 MW unit at Talwandi Sabo, which will be commissioned by 2012.

The state government of Punjab has committed a capital subsidy of $25 million in the current financial year, having already disbursed $37.5 million the previous year in an attempt to clear the subsidy backlog which had existed since 1996. On the infrastructure front, there are plans to improve the air-connectivity of the state. A second international airport will be constructed at Mohali. The government has also sanctioned 15 Special Economic Zone (SEZ) projects in the state and has recommended three more SEZ projects to the Indian government for approval. It will facilitate the development of 12 industrial manufacturing projects with an investment of $432 million and has sanctioned the development of an information technology park in Ludhiana, Punjab, with an investment of $44 million. It has already granted clearance for 11 new projects worth $2.79 billion, including five agro-industrial and six industrial projects.

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