Essar Power Gujarat Ltd (EPGL), a subsidiary of Essar Power Ltd, is finally turning the corner. After facing major financial losses and fuel supply challenges, the PAT for the fiscal ended March 31 was ₹35 crore, against a ₹684-crore loss in the previous year.
Essar Power is the unlisted arm of the Essar Group. EPGL runs a 1,200 MW imported coal-based power plant at Salaya, Gujarat, which meets about 9 per cent of Gujarat’s power demand.
EPGL posted an EBITDA of ₹525 crore (₹199 crore). The management has attributed the turnaround in performance to better operational efficiency and reduction in coal prices through e-auction procurement.
In 2007, EPGL had entered a power purchase agreement with Gujarat Urja Vikas Nigam Ltd for supplying over 1,000 MW of power. The rest of the power was to be sold on a merchant basis. The Salaya plant achieved financial closure in 2010 and became operational in 2012.
Essar Power Executive Vice-Chairman Sushil Maroo, told media persons here that in the last three years the company had faced a massive decline in net worth due to high coal prices. But now coal prices have fallen and procurement rules have changed. In 2015-16 the company was PAT positive for the first time, he said.
Maroo added innovative procurement of coal, reduction in operational cost, optimising the plant and higher sale of power on merchant basis has helped in improving PAT. In 2014, there was 85 paise gap between the international coal prices and power tariff, but today the power tariff is higher than coal cost by 10 paise, he said.
He added that the fall in coal prices has also resulted in operationalising Essar Power’s Mahan power plant, which was stuck due to unavailability of coal and cancelling of a coal block.
Source: Hindu Businessline
