Gayatri to sell 49% in power project to SE Asian firm

Infrastructure company Gayatri Projects Ltd is roping in a strategic partner in its largest power project coming up at Krishnapatnam in Andhra Pradesh.

The company is setting up a 1,320 mw (660X2 mw) coal-based plant with linkages from Mahanadi coal fields.

“We have identified a partner for strategic investment in the project from South East Asia. It is a major player in power sector with 4,000-5,000 mw capacity in operation. We have decided to offload about 49% equity in the power company to the partner,” K G Naidu, Gayatri’s CFO, told DNA.

The project is being taken up with an outlay of Rs 6,890 crore. About Rs 1,730 crore would be equity, the balance being raised through debts.

“Our partner will bring in about Rs 1,200 crore as his share for the 49% equity. We will have to invest about Rs 530 crore. About 90% of debt has been tied up. We plan to announce a formal financial closure sometime in June this year,” Naidu said.

Gayatri’s subsidiary - Gayatri Energy Ventures Ltd -handles its power projects. The subsidiary has floated a special purpose vehicle - Thermal Powertech Corp - for the Krishnapatnam project, which is being set up using super critical technology.

The strategic partner will pick up stake in the SPV. A definitive agreement is expected to be signed in June.

The company has already acquired about 1,400 acres for setting up the plant.

“We have received the final environment clearance and the coal linkage, too, is in place. While we plan to meet about 70% of our coal requirement from Mahanadi, we will import about 30%. This is a blended coal project,” he said.

The company has also finalised a tie-up with Power Trading Corporation for offloading power. “We have the approvals to make the project completely merchant,” he said.

According to him, the strategic partner is being seen important for the project more in terms of the expertise it has.

“More than the funds, we will get the technology support. The partner has the experience of working with several major power projects in the world,” he said.

Beginning its power foray with this project, Gayatri is simultaneously working on plans to take the capacity to over 5,000 mw in the next three years.

“Within Krishnapatnam, we have the headroom to double the capacity and make it about 2,600 mw. Additionally, we are negotiating with a power company in central India for buying out about 500 mw. This deal is at an advanced stage. We are also working on setting up greenfield projects in Karnataka and Maharashtra. All this will happen in the next 2-3 years,” Naidu said.
The company also plans to dilute equity in its energy vertical to raise further funds required expanding the capacity.