See plant load factor around 40-45% in Q2: GVK Power

In an interview to CNBC-TV18, Isaac George, chief executive officer, transportation and director finance, GVK Power & Infrastructure says, the power projects did not perform well not because there was any issue with the plant, but because of short supply of gas.

GVK Jegurupadu 1, the first project, he says, operated around 73% plant load factor (PLF). "“Jegurupadu 2, which receives gas from Reliance, operated at around 68% PLF and Gautami operated just at 45% PLF. So, I think the profits of the company got pulled down basically because these projects did not operate at capacity," he elaborates.

The company, he says, will continue to operate at lower levels of PLF. "I think it will be around 40-45% and not beyond that during the Q2 also, unless and until the government takes a decision to supply LNG or RLNG to take care of the deficit in the state."

According to him, unless the government takes a call that it will supply the company with alternative fuel, the power sector will reel under short supply of gas. “Power could be an overhang,” he adds.

Below is the edited transcript of his interview with Udayan Mukherjee.

Q: What is the update on power business? You seem to be operating at a fairly sub-optimal level because of inadequate availability of gas still.

A: Basically, the power projects did not perform well not because there was any issue with the plant, but because of short supply of gas. GVK Jegurupadu 1, the first project operated around 73% plant load factor (PLF). That is because we received gas from Gas Authority of India.  The other two projects, which receive gas from Reliance Industries, operated below optimal level.

Jegurupadu 2, which receives gas from Reliance, operated at around 68% PLF and Gautami operated just at 45% PLF. So, I think the profits of the company got pulled down basically because these projects did not operate at capacity, though availability of all these projects has been above 95%. We were not in a position to operate because of the short supply of gas.

Q: Is there any improvement that you are expecting in the current quarter, in the July-August-September quarter or will the situation with gas availability remain this poor?

A: Honestly no. But there was a surprise element that some of the gas that we were getting was contemplated to be diverted to Dabhol power. The Chief Minister of Andhra Pradesh had a meeting with the Prime Minister and now, thankfully the power is not going to be diverted.

We will continue to operate at lower levels of PLF. I think it will be around 40-45% and not beyond that during the Q2 also, unless and until the government takes a decision to supply LNG or RLNG to take care of the deficit in the state.