THREE years ago, it was an inhospitable 220-acre craggy expanse of laterite rock. Today, this once no-man's land at Jegurupadu in Andhra Pradesh's east Godavari district is home to the first functioning green field private power project since the Centre invited the private sector to participate in electricity generation in 1991. Promoted by GVK Industries, at an estimated cost of Rs 816 crore, the 235 MW fast-track project has quietly shot to existence ahead of bigtimers like Enron, AES, Cogentrix and the Hindujas which have been in the headlines for the past few years.
As the first surge of electricity flashed through a double circuit 220 KV transmission line to the Andhra Pradesh State Electricity Board's (APSEB) Bommuru receiving station, eight km from the site, and then onto the grid on July 4, at 9.16 am, India's power privatisation policy, five years after it was announced, finally appeared to be getting somewhere. It's a definite—though small—beginning in India's long trek to private power.
It's also what had seemed, till July 4, the craziest project around, driven by the sheer chutzpah of a risk-happy entrepreneur who decided to go ahead and get the damn power flowing instead of poring over the minutiae of contractual arrangements.
The fulcrum of an independent power project is 'financial closure'—getting supply and equipment contracts and guarantees and counter-guarantees signed, sealed and in place so that the promoter and his lenders are sure of getting their investments back. Once this complex process is concluded, it becomes just another engineering project. No new private power project in India has yet achieved financial closure. And G.V. Krishna Reddy (the GVK of GVK Industries) has done the unprecedented among infrastructure entrepreneurs: he has refused to wait for financial...