Essar Power, one of the leading power sector developers in the private space, has committed an investment of INR 5000 crore to complete its thermal power projects under execution.
The portfolio of its unfinished projects comprises the 1200 MW coal-based thermal power station coming up at Tori (Jharkhand) and the 60 MW unit at Paradeep in the eastern state of Odisha.The company has already made sizeable investments in both these projects by way of equity.
Out of INR 5000 crore needed to commission the projects, Essar Power is looking to tie up the credit of INR 4600 crore. Earlier, the company had a tough time to raise credit as lenders delayed funding for the Tori project due to the cancellation of the coal block. Essar Power had to abjure the coal block after the Supreme Court scrapped the licenses of 214 arbitrarily awarded blocks.
The present installed capacity of Essar Power is 4840 MW which includes 4,755 MW across seven plants in India and 85 MW at one plant in Algoma, Canada. This is roughly 80% of its targeted capacity of 6,100 MW.
Almost all of the company’s operational capacity is tied up through the captive/PPA route. Even for its under construction 1,200 MW Tori project, more than 890 MW is tied up with electricity distribution companies (discoms) through power purchase agreements (PPAs).
The company hopes to benefit from the Government of India’s recent notification on mega power projects that seeks to extend sops and benefits of large capacity thermal plants.
‘The recent notification on mega power project status is a relief for plants that had obtained provisional mega certificates, like our 1,200 MW Tori power project in Jharkhand. We have PPAs/MoUs to the extent of about 98% of the total plant capacity with the discoms and hence, are confident of achieving the Mega Power Status shortly. The extension gives us additional time to tie up the balance power offtake in accordance with the requirements of the policy”, said a recent company executive.
In last fiscal, Essar Power had imported around 3 MnT of coal to feed its Salaya plant and in this financial year, it plans to source nearly the same volume. The quantum of coal imports would depend on its Gross Calorific Value (GCV). Since the tariff for the Salaya plant is fixed, its earnings are prone to fluctuations in coal prices.
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