GVK Power and Infrastructure sits on a total consolidated debt of Rs 16,000 crore, according to the earnings results released by the company.
Although this is lower than the debt level of some other companies in the infrastructure sector, interest cost on the debt is a huge drag on the firm’s balance sheet. GMR Infrastructure, which is a peer company of GVK, has a debt burden of Rs 37,600 crore at the end of December 2012.
GVK announced a loss of Rs 335 crore, four times higher than the previous year, owing to several factors including shortage of fuel for its gas-based power plants in.
The company’s two projects Jegurupadu (phase 2) and Gautami, that have a capacity to produce 680 mw, have been completely shut since February. No solution to the fuel shortage problem is in sight.
The company is considering several options to restart its power plants. But all the available options may result in an increase in the cost of power produced. The first choice is moving to High speed diesel instead of gas. But changing over to (expensive) HSD as feedstock could more than double the price of power to about Rs 8 a unit.
GVK has applied to the Andhra Pradesh government for permission to do this- its already being done intermittently at Jegurupadu phase one. The second is to buy LNG (Liquified Natural Gas) from the west coast.
This is an even more option as the cost of LNG combined with inter-state taxes and transportation takes the cost of power up to Rs 13 or Rs 14 a unit.
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