Essar to invest Rs20,000 cr to raise power capacity

Essar to invest Rs20,000 cr to raise power capacity

New Delhi: Corporate conglomerate Essar Group on 21 August said it plans to invest more than Rs20,000 crore over the next five years to scale up power generation capacity to 6,500 MW from about 1,200 MW at present.

“We already have five power plants with total capacity of 1,200 MW and are targeting to achieve a capacity of 6,500 MW over the next four-five years," Essar Power managing director A.K. Srivastava said.

This would require an estimated investment of Rs20,000 crore, to be funded in a debt-equity ratio of 75:25. This means, the group would have to invest about Rs5,000 crore as equity and arrange nearly Rs15,000 crore through borrowings.

Srivastava said funding would not be a constraint as the group had enough reserves to pump in the required equity and would also raise debt when required.

Giving details of the power projects, he said Essar Power (Jharkhand) Ltd, a part of Essar Power Holdings Ltd, was in the process of setting up a 1,200 MW coal-fired project near Ranchi in Jharkhand. The project has been allotted a captive coal mine with reserves of 100 million tonnes. In all, the project would require an investment of around Rs5,000 crore, he said, adding financial closure is expected by March 2008.

Besides, Essar is setting up a 1,200 MW at Mahan in Madhya Pradesh and a similar capacity plant near Jamnagar in Gujarat, he said. While the Mahan project would be located adjacent to a coal-mine, the Gujarat plant would be run on imported coal.

“We are looking at Indonesia and South Africa for coal supplies and hope to finalise details within a couple of months," he added.