AIM-listed Indian clean energy owner and operator Greenko has secured rights to develop 117 MW of natural gas energy generation in the southern state of Andhra Pradesh through the purchase of LVS Power Limited. Once developed, it will increase the operating capacity of Greenko to 158 MW and the total secured capacity of the company from 470 MW to 587MW.
The natural gas fired project is structured in two parts that includes acquisition and (after approximately two years) conversion of an existing operational 36.8MW liquid fuel plant to natural gas (at 32MW capacity) and thereafter installation of up to 85 MW of additional natural gas capacity in the near term.
The existing power generation plant of LVS Power Limited has a long term "pass-through" power purchase agreement with the state of Andhra Pradesh. It is located on the east coast, close to the KG-D6 natural gas fields controlled by Reliance Energy and LVS Power has obtained an allocation of gas from those fields at a fixed price tariff for five years.
The total capital required for the acquisition and the capex required for the 85MW additional capacity is estimated to total € 80 million. Greenko
plans to finance three fourth of this through debt with the balance through cash. For the year ended 31 March 2010, LVS Power produced EBTIDA of € 5.9million (after non-recurring income of € 1.4 million).
As at 28 February 2010 (being the date for the completion balance sheet) the assets being acquired had a book value estimated to be approximately € 13.3 million. Once complete, Greenko expects the project to generate returns above the company’s benchmark equity returns.
Anil Chalamalasetty, CEO of Greenko, said: "The Directors believe that natural gas based power generation will provide excellent alternative base load energy generation alongside our biomass assets. The Project will be completed in the near-term and provide more predictable, non-seasonal cash flows which, together with our existing hydro plants, will help diversify our portfolio of assets and take advantage of the exciting opportunities currently available within the Indian power markets."
Meanwhile, Greenko has also appointed Vin Murria (aged 47) as a non-executive director of the company. Vin is a partner at Elderstreet Investments and CEO of Advanced Computer Software Plc, a consolidator in the healthcare sector. Based in London, she has over 20 years of experience in the developing and building technology and high growth companies and extensive knowledge of UK corporate governance and M&A.