The Essar Energy Chief Executive, Mr Naresh Nayyar, described as “extraordinary” the time being taken to gain forestry clearance for a number of coal projects in India.
“In terms of timing it is not expected,” he told Business Line in an interview, as the company reported a 49 per cent increase in EBITDA.
The company is still awaiting forest clearance for its Mahan, Chakla and Ashok Karkata coal blocks. The next meeting of the Empowered Group of Ministers is due to take place this week.
While the company is not giving any guidance on the time line, Mr Nayyar said he was confident that approval would be granted. “There is a change in the thinking process,” he said, adding that this was necessary if the Government's targets on affordable energy, including those in the latest five-year plan, were to be met.
“It does have an impact on new greenfield power projects,” he said. Given the costs of bringing in coal from abroad, the matter could not simply be resolved through foreign mine acquisitions, he added.
After approval is granted, it will take another 15 months for the first coal to be produced from 1,200 MW Mahan 1, due to begin commissioning this September. The company has earmarked alternative sources of coal “it has applied for tapering coal linkage and registered to bid for e-auction coal. The price paid at the e-auction would be considerably higher: around $67-68 per tonne (adjusting for quality) against $37 a tonne, though this would only apply to the 330MW from Mahan”, Essar said. In the long-term, Essar Energy hopes to produce coal for Mahan at just $16 a tonne.
The company also warned that the delays to approval processes in the power sector was hitting investor appetite including from debt providers and equity investors for greenfield projects.