Essar might sell gas-based plants to pare debt

Burdened by ~20,369 crore of debt, Essar Power is looking to sell two of its gas-based plants in Gujarat to reduce debt, a company official said. The company has two captive gas-based plants at Hazira with a capacity of 500 Mw and 515 Mw each, which are currently shut for want of fuel.

Burdened by ~20,369 crore of debt, private utility Essar Power is looking to sell two of its gas-based plants in Gujarat, a senior company official said.

“We are evaluating all options for monetising our assets,” Essar Power’s Chief Financial Officer Alok Nagpal told PTI. The company has two captive gas-based plants in Hazira in Gujarat with a capacity of 500 Mw and 515 Mw each, currently shut for want of fuel. The 500-Mw Bhander plant in Hazira was commissioned in 2006 and commenced full commercial operations in October 2008 but due to high fuel price, the company shut the plant three years ago. The 515-Mw Essar Power Hazira had signed power purchase agreements (PPAs) with Essar Steel and Gujarat Urja Vikas Nigam and was commissioned in October 1997.

“Both plants are ready and can go operational once we have fuel supply. We are looking at selling off these plants now. We are still evaluating its valuation and it may take some time. The benefit for the buyer, who would mainly be a captive user, will be that it can operate the plant immediately once the fuel is available,” Nagpal said.

The company earlier expressed hope that it may be able to commission the 500-Mw project this quarter saying it will be able to procure the fuel as the gas prices are coming down. Apart from the gas-based plants, it may also consider selling its coalfired plants to repay debt, he added. “We are evaluating these options as well. If we get good valuations, we may sell some of our coal-based plants as well,” Nagpal said.

Meanwhile, the company has sought easier terms of repayment for some of its power plants so it matches the life-cycle of the project.