Vemagiri Power Generation Limited

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Vemagiri Power Generation Limited (VPGL), an independent power producer, implemented the 520 MW greenfield power plant at Vemagiri, in East Godavari district and 12 kilometres away from Rajahmundry in Andhra Pradesh. The plant was to be developed on build-own-operate (BOO) basis. The power plant was built in two phases and was based on natural gas. The first phase involved creating a generation capacity of 370 MW and the power generated from the plant was supplied to the Transmission Corporation of Andhra Pradesh (APTRANSCO). Vemagiri power plant was part of an overall effort undertaken by Government of Andhra Pradesh (GoAP) and erstwhile Andhra Pradesh State Electricity Board (APSEB) to establish short gestation power stations to alleviate the power shortage in the state. APSEB conducted a global tender on tariff basis and awarded eight projects to six developers for a total capacity of 2000 MW. VPGL entered into a power purchase agreement with APTRANSCO, which was approved and cleared by Andhra Pradesh Energy Regulatory Commission in April, 2003. APTRANSCO was created after GoAP initiated a comprehensive power sector reform in 1998 and functionally unbundled APSEB into one generation company, one transmission company (APTRANSCO) and four distribution companies. During the transition period and as of April 2005, APTRANSCO was operating under a single buyer model and procured power from generation companies for further sale to distribution companies. VPGL also entered into a natural gas supply agreement with Gas Authority of India Ltd, to secure 1.64 million cubic meters per day of natural gas supply for 15 years. VPGL is part of the privately held GMR group. In early 2004, India Development Fund bought a 15% stake in VPGL. India Development fund is a public private fund set up with the support of the Ministry of Finance, Government of India, to facilitate the development of infrastructure in India. Financial closure for the first phase of the Vemagiri power plant was achieved in October, 2003. The cost of the first phase was estimated at Rs 112,400 lakhs (US$ 241.3 million) and the debt equity ratio was 70:30. The first phase of the Vemagiri plant was expected to be commissioned by December 2005, but became operational in Feb 2008.