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Statement by Essar Power in response to media article

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October 10, 2017 Bookmark and Share  

Mumbai, 10 October 2017: Essar Power Gujarat (EPGL) has taken objection to an article appearing in a section of the press, the contents of which seem to misinform the public that the issue is specific to EPGL.

Reacting to the article, Mr V Ashok, Chief Financial Officer, Essar, said: “Essar’s proactive stance in trying to protect value in the company and the continued financial and operational viability of the plant has been incorrectly portrayed as banks’ action to “take control”.

The domestic private power sector is reeling under the weight of an unstable policy environment and lack of a unified framework.

According to various reports, investments to the tune of Rs 1,40,000 crore are under stress for various policy-induced issues. These include, but are not limited to, decisions on cancellations to coal mines, non-allocation of coal linkages, state governments refusing to honour PPAs or accepting change of law as a legitimate reason for the producer/seller to demand a change in terms.

In the recent past, Tata Power Adani Power and Essar Power—all equally impacted by the Supreme Court decision not to allow pass-through of input cost escalatìons as a result of a change in duty structure on coal imported from Indonesia—have knocked on all doors to ensure viability of the plants.

To mitigate this action, Tata Power and Adani Power offered to sell 51% equity for Re 1 in their respective companies in Gujarat to the Gujarat discom, EPGL had also opened a dialogue with the creditor-banks to initiate SDR-like proceedings, which would afford EGPL a standstill protection of 18 months against security of transfer of 51% equity in EPGL, Mr Ashok said.

A total generating capacity of 10,000 MW is threatened into unviability and eventual closure. To be certain, Essar Power Gujarat Ltd (EPGL) was not a non-performing account (NPA) as on 30 June 2017 or as on 30 September 2017.

The proposal is under consideration of the Gujarat Government; a decision is expected in the next few months. Well cognizant of these circumstances, lenders have agreed to invoke SDR like provisions which provide for a standstill period of 18 months to Essar Power Gujarat Ltd (EPGL).

Mr Ashok further stated, “The 18-month standstill period will ensure uninterrupted operations at the 2x600 MW imported coal-fired plant at Salaya, which has a 25-year PPA with GUVNL. This will not only preserve the value of the asset, it will also ensure continued availability if power to the grid, because these are base load plants.

About Essar Power
Essar Power is one of India's largest private sector power producers with over 20 years' operating track record. It owns power plants in India with a total operational capacity of 3,745 MW, while 1,260 MW is under development. Of the operational capacity, 2,730 MW is coal-based and 1,015 MW is gas-based. The operating plants in India are at Mahan, Hazira, Salaya, and Paradip. A 1,200 MW plant at Tori in Jharkhand state, and a 60 MW plant (Phase II) at Paradip in Odisha state are under development.

Media contact:

Manish Kedia, Senior Vice President - Corporate Affairs, Essar
Phone: +91 98197 30092, Email:  manish.kedia@essar.com

Ravi Muthreja, Vice President - Corporate Communication, Essar
Phone: + 91 99301 34566, Email : Ravi.Muthreja@essar.com

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