Lanco and GMR deny 'profiteering' allegations

Vol 15, PW 11 (01 Dec 11) People & Policy

Lanco Infratech and Bangalore-based GMR Group vehemently deny allegations they are ‘profiteering’ by using cheap D6 gas supplies to generate power sold at high market rates.

GMR is receiving 880,000 cm/d of D6 gas at its 220-MW ‘combined cycle’ Tanir Bavi power station at Kakinada in Andhra Pradesh while Lanco is receiving 1.46m cm/d of D6 gas at its 734-MW gas-fired Kondapalli power station, also in the state. Vivek Kumar, oil ministry joint secretary marketing, wrote to his power ministry counterpart IPC Kesari on September 26 accusing GMR and Lanco of unfairly profiting from ‘peak season’ electricity rates using cheap D6 gas bought at the government-regulated rate of $4.2/mmbtu.

When contacted, a Lanco source said it uses D6 gas only to fire the 360-MW Phase-II at Kondapalli. More, it supplies power from Phase-II to state-owned electricity distributor AP Transco, under a contract won through open tender.

“We competed against coal-based power stations, companies who sell surplus power from NTPC power stations and even companies that generate ‘captive power’ to win the tender,” asserts Lanco. “There is no question of us ‘profiteering’ at all.

” In his letter, Kumar also claims Lanco and GMR are refusing to sign long-term Power Purchase Agreements (PPAs) with AP Transco, despite receiving D6 gas since November 2009. “It is wrong of people to accuse us of not signing any PPAs with AP Transco,” adds an angry GMR source, when contacted.

“We’ve been signing short-term PPAs of up to four months at a time with AP Transco!” GMR’s Tanir Bavi station, he adds, was originally built on a barge anchored off Mangalore and moved to its present Kakinada location only in July 2010. GMR also denies it is profiteering by charging higher rates for electricity during the peak season.