New Delhi: The government has approved Essar Power Ltd’s proposal to infuse up to $2 billion (nearly Rs 8,000 crore) as foreign equity in the company for undertaking various downstream projects, including power and coal mining.
“The approval will allow the company to invest in the permitted downstream activities, including investment in power sector and coal mining for captive consumption for power projects,” Finance Minister P Chidambaram said after a meeting of the Cabinet Committee on Economic Affairs (CCEA).
The proposal has already been cleared by the Foreign Investment Promotion Board (FIPB). Since the investment inflows have exceeded Rs600 crore, as per Press Note 7 (1999 series), the proposal needed to be cleared by CCEA.
The foreign direct investment in Essar Power would be increased to 100% an estimated investment of Rs8,000 crore as equity from Essar Power Holdings Limited (EPHL), a foreign entity which is a part of the Essar Group and is incorporated in Mauritius.
Essar Global Limited (EGL), a company incorporated in Cayman Islands is the holding company of EPHL and also holds diverse investments in India and other countries.
At present, EPL is the operating company of the Essar Group in the power sector. It owns and operates a 515 MW power plant at Hazira in Gujarat.
The company has lined up plans to invest over Rs20,000 crore in the power sector in the next couple of years, although EPH would provide funds only for the equity stake.
Essar Power plans to increase its installed capacity to 6,000 MW by 2012, which include power plants of 1,200 MW each in Madhya Pradesh, Gujarat and Jharkhand.