GMR's power zone plan blocked by gas shortage

GMR Infra's plans to have a power zone at its 11,000-acre Special Economic Zone in Andhra’s Kakinada have taken a back seat, due to drop in gas production at the Krishna-Godavari basin.

“The (power) plans have not progressed significantly. We have to wait for certain developments, particularly in the power sector,” said A Subba Rao, chief financial officer.

The SEZ is envisaged as a multi-product, port-based one; GMR took majority stake in it towards the end of 2010. The idea was to also attract power project developers if there was abundant availability of gas. These plans have not progressed after the output drop from Reliance Industries' D6 gas block in the K-G basin.

“Since the KG basin is very close to the place, if gas was available we could develop it as a power zone as well. There is a large pool of land and a lot of gas-based power plants can come up,” said Rao.

Since land acquisition is a roadblock for power projects, the company hoped that with as much as 11,000 acres of land already acquired, it could attract more power producers.

This is the third project of GMR stuck due to gas worries. Its 388-Mw Vemagiri power project has been operating at lower capacity after drop in gas supply. The company is also awaiting gas allocation for its 768 Mw project at Rajahmundry, being set up.

GMR has a 51 per cent stake in the Kakinada SEZ. The rest is held by IL&FS, Kakinada Sea Ports and the Andhra Pradesh Industrial Infrastructure Corporation. The SEZ is being promoted as part of the Petroleum, Chemicals and Petroche-mical Investment Region there. This extends along the east coast from Visakhapat-nam to Kakinada.

The multi-product SEZ has a wide range of projects — refineries, petrochemical units, ports and a liquefied natural gas terminal.

GMR has started work on developing the physical infrastructure such as roads, water and port connectivity.

It has been looking for anchor tenants and possible investors. The SEZ has investment potential of around Rs 30,000 crore by various industries. GMR itself expects to spend around Rs 2,000 crore for developing and operating the port.