The Essar group is setting up two coal-based power plants to generate 1200 mega watt (mw) in Jharkhand with an investment of Rs 5,000 crore (Rs 50 billion).
Essar Power (Jharkhand) Ltd will be the group's investment vehicle for setting up the power plants with two units of 600 mw each at the coal pithead in Chakala in Jharkhand. Essar Power (Jharkhand) is part of Essar Power Holdings that drives Essar's power business.
EPJL has been allotted a coal mine in Chakala, which has a reserve of over 100 million tonnes. The company is in the process of completing a detailed project report for tying up finance.
Three-fourth of the project financing will be done through debt, and the rest through equity contribution from the Essar group.
The requisite land for the project has already been identified and the process of acquisition is underway. The project is scheduled to be completed in four years after achieving financial closure, expected by March, 2008.
The country is expected to have a capacity to generate 78,000 mw of power during the 11th Five Year Plan. With the GDP growing at over 9 per cent annually, the power situation can only worsen if new power projects do not take off.
Essar was the first private sector company to set up a power project after the sector was liberalised.
Essar has experience in setting up and operating large power plants. It currently operates power plants with an annual capacity of 1200 mw through five units - Essar Power (515 mw), Bhander Power (500 mw), Vadinar Power (120 mw), Essar Steel, Visakhapatnam (35 mw), Essar Steel, Hazira (32 mw). The firm plans to generate 6,500 mw of power in the next five years.