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ArcelorMittal Nippon Steel India has acquired Essar Power Orissa, another captive power plant of Essar Steel through the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (Sarfaesi) Act, for ₹450 crore.
The large part of the debt of Essar Power Orissa was held by SBI and Edelweiss.
Last year, AM/NS bought Bhander power plant, a 500 MW natural gas-based thermal plant at Hazira, through a bidding process, from Edelweiss Asset Reconstruction Company.
Both the acquisitions put together would have cost AM/NS about ₹1,000 crore and resulted in 100 per cent recovery for the lenders, sources said.
Natural gas sourcing
AM/NS has paid the money upfront to banks and restructured both the distressed assets to become self-sufficient for its power requirements. The company has plans to revive both the plants through unique design capacity and competitive sourcing of natural gas from global markets, he added.
Incidentally, only the first phase of 120 MW of Essar Power Orissa at Paradip is operational and the Sarfaesi process was initiated by the lenders in 2017 before the completion of second phase of 60 MW.
An Essar official said lenders have recovered their full principal from 60 MW power plant in Odisha by selling it to AM/NS and recovered about ₹450 crore in a difficult environment.
Essar is largely exiting its coal-based power portfolio keeping in mind the green energy requirements and will concentrate its efforts on building a renewable power and storage portfolio.
“We are in the final stages of completing our de-leveraging programme and in the next two quarters we intend to repay the balance ₹10,000 crore which is largely in the power portfolio,” he added.
Record repayment
Essar has already repaid ₹1.40 lakh crore of its overall debt of ₹1.50 lakh crore as part of debt reduction programme. This is the single largest debt reduction and repayment programme in the history of Corporate India.
“With the debt reduction programme behind us we look forward to refocusing our energies towards the next phase of growth,” he added.
Essar Steel was acquired jointly by ArcelorMittal and Nippon Steel in December 2019 under the insolvency law and since then, there have been efforts to make operations self-sufficient.
Ancillary units – like power, slurry pipeline and captive port – were not part of Essar Steel’s insolvency process.
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