GMR Energy signs memorandum of understanding on power plant sale

Hyderabad: GMR Energy Ltd (GEL), a part of GMR Group, has entered into a memorandum of understanding (MoU) on sale of power plant for $63mn. GMR Group owns a 220 MW gas-based power plant at Kakinada in Andhra Pradesh. The infrastructure group is selling its barge-mounted power plant to a buyer for $63 million.

In a regulatory filing, GMR Group said that GMR Energy will sign a definitive agreement with the buyer shortly. However, GMR Group didn’t mention name of the buyer in the communique. “GEL has entered into a memorandum of undertaking with an external party for sale of its 220 mw gas based power plant for a consideration of $63mn and is in the process of entering into a definitive agreement and conclude the sale,” the filing said.

GMR power plant is operational since November 2001 and redeployed at Kakinada since April 2010. However, the power plant couldn’t generate power since 2013 due to shortage of natural gas. This situation made the company to explore several commercial options for the plant.

According to the recent investor presentation of GMR Infrastructure, the project cost of the plant was pegged at $90 million (Rs600 crore). GMR Group, which owns both gas and coal-based power plants in the country, has been suffering losses due to shortage of fuel.

The energy vertical of the group incurred losses to the extent of Rs 179.95 crore during the quarter ended June 30, 2017, as against loss of Rs 95 crore in the same quarter a year ago. GMR Energy shares closed Rs0.30 or 1.86 percent higher at Rs16.40 on BSE