Essar Energy Plc on Monday reported a 49% jump in earnings for the first half of 2011 on the back of higher refinery margins, but the London-listed firm said it continues to battle delays related to regulatory approvals for its projects.
Essar Energy’s H1 earnings before interest, tax, depreciation and amortisation (EBITDA) were up 49% to $477.9 million, while pre-tax profit was up 80% to 278.5 million, CEO Naresh Nayyar said in a conference call.
“The first half of 2011 has been a mixed period for the company. Operational performance has been good, with a solid performance at our Vadinar Refinery (in Gujarat) and high availability across our power plants.
“This, together with a significant uplift in refining margins, has delivered a strong financial performance, with profit-before-tax up 80% to $278.5 million,” he said.
Essar said it is still awaiting forest clearance from the government for its Mahan, Chakla and Ashok Karkata coal blocks, which will provide fuel for its Mahan-I and Tori power stations. “We continue to experience delays due to slow progress with certain regulatory approvals, particularly for our coal blocks in India and Indonesia,” Nayyar said.
“... Delays to regulatory approvals and delays to the access of fuel supplies are a cause for concern,” a company statement said. “Not only do these delays impact the economic returns on projects, but they are acting to discourage investment in the sector from project sponsors, debt providers and equity investors.”
Essar said four major projects are on course for completion in the coming months, which according to analysts’ consensus, will add around $2 billion to Essar Energy’s EBITDA, taking the total to $2.7 billion in FY’2013, compared to $718 million delivered in financial year 2010.