Essar Power puts capacity expansion on hold
By Shilpa Puri
The current malady afflicting the power sector appears to be deterring fresh investments in power generation projects. The latest casualty is Essar Power Ltd which has put its expansion plan on hold.
For some time now, Essar Power, which set up India's first independent power plant, has been toying with the idea of increasing its existing combined cycle plant capacity of 500 mw at Hazira, Gujarat, by another 500 mw.
"We have received all clearances and the required land has also been acquired. Nevertheless, the poor financial health of the Gujarat Electricity Board, one of our customers, is hampering. In all fairness, GEB has been prompt in paying its bills, however the future is questionable," Arun Srivastava, Managing Director, Essar Power Ltd, told Project Monitor.
EPL supplies power to both GEB (300 mw) and Essar Steel (215 mw). There has been talk, though, about Essar Steel establishing its own captive power plants and stopping offtake from EPL; however, these plans have been shelved.
Third party sale of generated power is another option available to Essar Power but this could prove highly uneconomical given the present conditions. Problems in such cases arise when the plant has to shut down for maintenance etc.
The fuel used for the plant goes a long way in determining the tariff paid by customers of a power plant. EPL has, since inception, made contentious efforts to keep the cost as low as possible, thereby ensuring that its clients did not face difficulty in paying bills.
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