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Essar’s $ 1 bn order for power equipment

The Ruia-family controlled Essar group is now hot in the race to build power plants, reports Indulal PM.

business Updated: Nov 05, 2007 00:24 IST
Indulal PM

The Ruia-family controlled Essar group is now hot in the race to build power plants. The steel-to-telecom conglomeration is understood to have placed a $ 1 billion (approximately 3950 crore) order to source power generation equipment.

The group is planning to control 6,000-megawatt power generation capacity over the next five years and has been allocated two coal mines for two projects, one in Madhya Pradesh and another in Jharkhand.

Industry sources said the group has placed an order on Harbin Power of China for supply of four BTG (Boiler Turbo Generator) packages and other project materials.

Harbin Power is one of China's largest power plant equipment manufacturers, with a production capacity of 30,000 MW of power plant equipment per annum.

These will be used for the company's two power projects being set up, one by Essar Power(Gujarat) Limited at Jamnagar in Gujarat and one by Essar Power (MP) Limited at Mahan in Madhya Pradesh.

Including the Jharkhand project, the group is planning to invest over Rs 15,000 crore to set up three power plants of 1,200 MW each. All the power projects are expected to be completed by 2012.

Company officials confirmed the development but refused to divulge further details.

Currently, the group has under development power generation capacities aggregating to 1,200 MW, which include two power plants in Hazira, and one each in Vadinar and Visakhapatanam.

The cost of the each project has been estimated at approximately Rs. 5,000 crore and is expected to be funded on the basis of a debt-equity ratio of 3:1. In other words, the group will borrow three rupees for every rupee invested as equity.

The Mahan power project is being set up closer to coal mines. The company has already been allocated a coal mine, which is being jointly developed by Essar and Aditya Birla Group.

The Jamnagar power plant will use imported coal as fuel and the group is in the process of tying coal supplies. Essar had won the Gujarat power project against competitive bidding earlier this year.