Essar Energy has revived a 25-year contract to supply Gujarat with 800 MW of power that was terminated two months ago.
The long-term power purchase agreement with Gujarat State electricity utility, Gujarat Urja Vikas Nigam Ltd was terminated in August, just three months after it was signed.
GUVNL had failed to meet certain conditions of the agreement within the agreed timetable, London-listed Essar Energy said at the time, not specifying what they were. Now the contract was being revived after the conditions had been satisfied, it said.
Tariff
Essar Energy will supply GUVNL with power at a levelised tariff of Rs 2.80 per kWh net of transition costs, according to the same terms struck in May. The supplies will come from Salaya II, the 1,320 MW capacity power plant, run on imported coal, due to be commissioned in the first quarter of 2014.
The rate is below that agreed in a contract signed with the Bihar Electricity Board in August. Essar Energy will supply 300 MW of contracted capacity for 25 years from its Tori power station in Jharkand at a levelised tariff of Rs 3.28 per kWh, significantly higher than a previous contract with the same electricity board. The deal prompted hopes that the firm could achieve higher tariffs from deals in the future, according to analysts.
Essar Energy currently has 1,600 MW of capacity operational, and an additional 8,070 MW under construction, as it hopes to increase power generation's contribution to its overall revenues, currently dominated by its refinery business. Other projects under construction include Mahan 1 in Madhya Pradesh, with 1,200 MW capacity, Salaya I, and III in Gujarat, with 1,200 MW and 600 MW capacity respectively.