With gas supplies from KG-Basin coming to a standstill, Gautami Power Ltd, a GVK group company has sought permit from the Ministry of Environment and Forests (MoEF) to use High Speed Diesel (HSD) instead of natural gas at its plant in East Godavari district of Andhra Pradesh.
This comes after a committee under the MoEF opined that usage of HSD for power generation will not be as eco-friendly as natural gas and directed the company to obtain views of Ministries of Power, Petroleum and Natural Gas on the issue.
"The Committee deliberated on the proposal and noted that the quantity of HSD to be utilised for power generation is quite substantial. The usage of HSD in such quantities will not be as eco-friendly as natural gas.
The Committee therefore desired that the PP shall obtain the views/comments of Ministry of Power and Ministry of Petroleum & Natural Gas on the use of HSD for the project before taking a decision," the Expert Appraisal Committee (EAC) under the MoEf said in its meeting last month.
It was also noted that Government is subsidising HSD for certain specific-end users only such as for transportation, the EAC further said. The gas-based power project has natural gas allocation of 1.96 MMSCMD by MoPNG from KG Basin for operating the plant on full capacity.
As the gas supplies for the project have come down due to reduction in gas production in the KG D6 fields, it is requested to amend the environment clearance for using HSD (green diesel) with sulphur content not exceeding 0.05 percent as an alternate fuel instead of emergency fuel. The plant operated on full generation for the years 2009, 2010 and 2011 using gas supplied from KG D6 gas fields. However, since October 2011, the total gas supply from KG D6 has been reducing from the original level of 60 MMSCMD to less than 15 MMSCMD and supply to power sector was stopped since March 2013.
As per the existing policy of the Government, power generation using indigenously sourced HSD is allowed.
The Ministry of Power and MoPNG has already accorded NOC for HSD as fuel for GVK's Jegurupadu Phase II Power Project (220 MW) in East Godavari district last year. Many gas-based power plants including that of GVK's are sitting idle due to non-availability of gas.
GVK Power stock price
On January 15, 2014, GVK Power & Infrastructure closed at Rs 10.20, down Rs 0.23, or 2.21 percent. The 52-week high of the share was Rs 15.36 and the 52-week low was Rs 5.52. The latest book value of the company is Rs 15.84 per share. At current value, the price-to-book value of the company was 0.64.