GVK Power eyes 7,500 MW capacity by FY17

GVK Power & Infrastructure Ltd. | Power Generation/Distribution | Power | BSE: 532708 | NSE: GVKPIL

26 Sep 2011 Evaluate

GVKPower and Infrastructure, the flagship company of Hyderabad-based GVK group, isplanning to have 7,500 MW thermal power generation capacity by FY17. To run the plants thecompany would import 20 million tonne of coal a year from GVK Group's intendedacquisition of assets of Australia's Hancock Coal. The company, which has gas-based 901 MW power generation capacity, isexpecting to commission its first thermal plant of 540 MW in Punjab in FY13. Moreover,the move is part of a long-term growth plan of the company, which is aiming tohave about 12,000 MW power generation capacity by FY17. Currently, new units of3,530 MW power generation capacity are at various stages of construction anddevelopment, including 1,390 MW hydro power units.

On September 16, the GVK group had announced it would acquire coal assets andrelated logistics infrastructure in Australia from Hancock for $1.26 billionthrough a group company GVK Coal Developers (Singapore). The coal assets haveresources of 7.9 billion tonne. The company is also planning to divest some ofits equity in the new venture to raise around $1 billion to fund theacquisition. The company has received proposals from several firms, includingan Indonesian coal company, for partnership to jointly develop the mines inAustralia. Moreover, the company islikely to invest additional $6 billion in the first phase of development whichit is looking to fund through raising debt and outsourcing a range ofactivities like coal washing to optimise the costs. According to the deal withHancock, the project will come into production in 2014, dishing out 30 milliontonne of coal a year. The production can be increased to 84 MT as thedevelopment of assets progresses.