“Our Operating capacity will go up to 4,510 Mw by Mar”: ESSAR energy

Source Essar :The London-listed Essar Energy would be busy for the next six months as it is in the last leg of commissioning 3,000 megawatts (Mw). Chief operating officer of the group’s power vertical K VIJAYA BHASKAR REDDY talked to Katya B Naidu on their capacity addition plans.

The company is on a capacity expansion mode. How many units do you plan to add in the next few months?We expect to commission three power projects before March 2012. In the next couple of weeks, our first unit at Salaya will be synchronised and after that another five, before next March.  On commissioning of these units, the op­erating capacity will go up to 4,510 Mw.

We are currently operating 1,600 Mw and projects of 8,070 Mw capacity is under various stages of construction and commissioning. All the power projects are financially closed. The total investment of Essar in India’s power sector would be around $10-11 billion (Rs 48,000 crore-Rs 50,000 crore) on completion of all the ongoing projects.

How many projects will be commissioned by the end of March 2012? Have you tied up fuel for these projects?

Two units of 600 Mw at Salaya, aggre­gating to 1,200 Mw; two units of 600 Mw, aggregating to 1,200 Mw at Mahan and two units of 255 Mw each aggregating to 510 Mw at Vadinar will be commissioned by the end of the current financial year. We have tied up fuel requirement for the entire portfolio, except for the Salaya II project. We are looking to buy an additional coal block with reserves of 100-150 million tonnes to meet this requirement. This will ensure fuel availability for the entire portfolio of 9670 Mw.

What is the progress on coal blocks that you hold domestically and internationally?

We currently hold coal reserves of 450 million tonne (mt), of which 350 mt is in India and 100 mt overseas. This includes 72 mt in Mahaan, 75 mt of the Chakla coal block, approximately 100 mt of the Ashok Karkatta and approximately 117 mt in Rampia coal block. The remaining 100 mt reserves are in Indonesia and Mozambique. These overseas blocks will supply to the Salaya and Vadinar projects. Some of them are awaiting approvals.

Some companies have delay their plans to set up gas-based power plants. With the current international gas prices climbing up, how will their viability be affected?

International gas prices have gone up substantially impacting the cost of pow­er generation. The deprecation of rupee is further adding to the woes of power companies. The power generated through gas based units will enjoy least priority in merit order of dispatch. At the current fuel prices, gas-based projects are not attractive investment proposition.

The worsening financial crisis of state electricity boards has become a worry to the sector. How will this affect your company?

Essar has a good mix of power buyers that include captive, long-term PPA and merchant sale. Currently, we supply most of our power to Gujarat, a state which has financially strong electricity board. Most of our long-term power, around 2,200 Mw is tied-up with this the state. We have tied up 820 Mw of power with Bihar and 150 Mw with Madhya Pradesh. Besides, there is escrow mechanism available to ensure payments on a regular basis.



Mechanical engineer with experience in Power Plant maintenance , operation and auditing for ISI marked products. MBA in Power Management from National Power Training Institute, Faridabad. Working as Consultant for Bridge to India Pvt. Ltd. Expertise in: 1) Power sector regulations 2) Financial Modelling 3) Project Development solar PV plants 4) Strategic consulting 5) Report writing

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