The natural gas opportunity is structured in two parts: the acquisition and conversion of an existing operational 36.8MW liquid fuel plant to natural gas (at 32MW capacity); and the installation of up to 85MW of additional natural gas capacity in the near term. The additional capacity, including obtaining all approvals, is expected to take two years and the project as a whole will result in a 117MW capacity addition for Greenko.
The existing generating plant has a long term ‘pass-through’ or ‘tolling’ power purchase agreement with AP. It is located on the east coast, close to the KG-D6 natural gas fields controlled by Reliance Energy.
The company being acquired has obtained an allocation of gas from those fields, under a Government of India allotment given to only four assets under the last empowered group of ministers (a special committee set up for gas allocations), which provides a fixed price tariff for five years.
The total capital required for the initial acquisition and the expenditure required for the 85MW additional capacity is estimated to total EUR80m. Greenko expects to finance this cost with debt of approximately 75% with the balance being deployed in cash in making the acquisition, which reflects the assets acquired and the development of the 85MW additional project.
Once the project is complete, electricity sales will be structured through a combination of power purchase agreement and merchant sales, and the project will be eligible for carbon credits as part of the fuel switch methodology under UNFCCC Protocol.
Greenko has also completed the acquisition process of 120MW of hydro projects including 20MW of operating hydro in Himachal Pradesh and Karnataka and 100MW of concessions on the river Kaveri in Karnataka.
