Essar Power has tentatively zeroed in on an Indonesian company for its imported coal requirement.
May import 3.5 million tonnes a year
MUMBAI: Essar Power, which has embarked on an ambitious target of achieving a domestic power-generation capacity of 6,000 MW by 2012, has tentatively zeroed in on an Indonesian company for its imported coal requirement.
Though the company officials didn’t disclose any information on the development, sources said chances were fair enough that a deal would be struck soon for importing up to 3.5 million tonnes of coal per year.
Essar Power, a part of the $20 billion Essar Group with diversified interests, is coming up with a 1,200 MW power plant at Jamnagar in Gujarat.
Simultaneously, it is also building two more power plants in Madhya Pradesh and Jharkhand, each having a capacity of 1,200 MW.
“While coal linkages for its plant in Madhya Pradesh and Jharkhand have already been achieved, the Jamnagar plant has yet not tied up the fuel,” said a company official.
Unlike plants in Madhya Pradesh and Jharkhand, the Jamnagar power plant will be fired by imported coal which has higher calorific value and low ash content.
However, after almost three months of negotiations, Essar Power seems to be approaching a deal for imported coal with an Indonesian-based company.
Essar Power won the bid from Gujarat government for constructing a power plant at Salaya in Jamnagar in August 2007 outbidding Tata Power, the Adani Group and Torrent Power. The plant would come up on an area of 1,500 acre and would entail an investment of Rs 4,800 cr. It has also signed a 25 year power purchase agreement with the state government for selling 1,000 MW of power at a cost of Rs 2.40 per unit. The remaining it will sell independently.
The company has also signed an agreement with a Chinese power equipment company - Harbin Power for sourcing boiler turbo generators (BTG) for the Jamnagar plant and for the Mahan plant in MP. Sources said the deal size was up to $ 1.5 billion and it would take between six and twelve months for the orders to reach India.
The company had been negotiating with Indian major Bharat Heavy Electricals Ltd (BHEL) and other Chinese companies such as Dongfang and Shanghai Electric including Harbin Power. However, BHEL’s limited capacity (6,000 MW of power equipment manufacturing) and high lag time resulted in the orders going to China. Harbin Power has a capacity of 30,000 MW of power equipment manufacturing.
Construction major Larsen & Toubro has also placed orders beyond Indian shores for super critical boilers and turbines because of BHEL’s limited capacity and lack of expertise in super critical equipment manufacturing. While the orders for boilers have gone to Mitsubishi, the company is expected to sign an agreement with Toshiba for turbines.
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