Prashant Ruia

Gayatri Ramanathan

For a group that is conspicuous by its low key presence, the Mumbai-based shipping-to-steel Essar group has of late been making waves: the group’s energy division has been active in the market acquiring two coal mines to fire its upcoming power plants as well as developing additional capacities that would catapult the group into the big league of the independent power producers in India.

Says V Suresh, chief financial officer of the group’s power business, “Whichever way we look at it, the opportunity in the power sector is enormous. The peak demand power deficit is 14 per cent; and with the economy set to grow over seven per cent this deficit can only grow – unless of course new capacities get created.”

To fuel its ambitions, the company plans to invest funds to the tune of US $4.5 billion across generation, transmission and power trading. Most of the debt, raised in the domestic market, has been tied-up and can be drawn down as required. The equity will come from the family.

Essar Power, the group’s power business, has set itself ambitious targets – to emerge as one of the major private power producers. The company plans to add a capacity of 4,800 Mw by 2012 up from the current 1,200 Mw.

Another 1,300 Mw capacity is under development and will come on stream by 2014, ranking the group among the top five private sector players in India’s power business.

In the pipeline are projects with a capacity of 4,880 Mw with Salaya, Tori and Mahan each coming in at 1,200 Mw by 2012, amounting to 3,600 Mw. The other 1,200 Mw will come from Vadinar, Hazira and Paradip as captive capacities for existing projects. Another 5,370 Mw will come in by 2014 from projects that are currently under development. These include 600 Mw each from Tori II, Mahan II, Salaya II & III 1,920 Mw, and 2,250 Mw from Neptune I & II.  

The group has chosen a judicious mix of fuel – domestic and imported coal alternating with natural gas. Essar’s existing plants in Gujarat are a mix of gas and coal based units.

Of its two upcoming Gujarat plants, one will use imported coal as its fuel, while the second will again be a cogeneration plant. The two projects under implementation in MP and Jharkhand will be pithead coal based plants.

Says Suresh, “My biggest year will be 2011 when I am going to bring in 2,000 Mw of capacity. In July we will be launching VPCL which is 380 Mw, then Jharkhand will come in 2012, along with Hazira which is a corex gas based project and Paradip for the Orissa steel plant.”

Also Read

• GMR to start mining coal in Indonesia next month
• MEC Coal scouts power partners
• GoM may meet on July 2 to decide fate of 8 coal blocks
• Essar Seeks Indonesia, Australia resources to meet demand
• Essar Power signs PPA for Tori I power plant

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