Trouble hit Essar Power may have found a way to stay afloat. The company says it will triple the quantum of power it sells in the spot market as sale to the Gujarat government plummets.
“We are currently selling 300 MW in the spot market every day, this is a tenth of our total generation capacity. The power sold was fetching around ₹5 a unit,” Executive Vice Chairman at Essar Power, Pradeep Mittal told BusinessLine.
Shift to spot market
“We will be tripling this to 1,000 MW by April 2018 end with the completion of the Mahan-Sipat transmission line,” he added. The commissioning will help evacuate power from Essar Power Madhya Pradesh’s 2x600 MW Mahan Thermal Power Project.
Essar’s shift to the spot market has been driven by the Supreme Court’s move to deny a compensatory tariff to thermal power producers in Gujarat. Imported coal-based power producers had sought to charge a higher tariff for the power they generated after a change in Indonesian law drove up coal prices. The Gujarat government contested this and the apex court ruled in its favour.
The power producers refused to run their projects and sell power at the pre-committed lower rates. This, in turn, stressed the assets and the loans that were taken on them.
Last October, lenders to Essar Power Gujarat moved to take control of the company’s 2x600 MW imported coal-fired plant at Salaya. According to Mittal, the company currently has a debt of around ₹5000 crore.
As of now, both the Centre and the State seem to be passing the buck when dealing with the problems faced by imported coal-fired power plants in Gujarat. But the Ministry of Power has asked the Gujarat government and imported coal-based power producers to find a way for reviving stranded thermal power projects in the State.
Minister of State (Independent Charge) for Power and Renewable Energy RK Singh had called a meeting with the Gujarat government’s representatives and lenders to the thermal power projects to find a way of de-stressing these assets.