Burdened by a whopping ₹20,369-crore debt, private utility Essar Power is looking to sell two of its gas-based plants in Gujarat to reduce debt, a senior company official said.

“We are evaluating all options for monetising our assets. We are looking at selling two of our captive gas-based plants in Gujarat,” said CFO Alok Nagpal.

The company has two captive gas-based plants at Hariza in Gujarat with a capacity of 500 MW and 515 MW each, which are currently shut for want of fuel.

The 500 MW Bhander plant was commissioned in 2006 and commenced full commercial operations in October 2008. But due to high fuel price, the company shut the plant three years ago.

The 515 MW Essar Power Hazira had signed power purchase agreements (PPAs) with Essar Steel and Gujarat Urja Vikas Nigam and was commissioned in October 1997.

“Both these plants are ready and can go operational once we have fuel supply. We are looking at selling off these plants now. We are still evaluating its valuation and it may take some time. The benefit for the buyer, who would mainly be a captive user, will be that it can operate the plant immediately once the fuel is available,” Nagpal said.

The company earlier expressed hope that it may be able to commission the 500 MW project this quarter, saying it will be able to procure the fuel as the gas prices are coming down.

Apart from the gas-based plants, it may also consider selling its coal-fired plants to repay debt, Nagpal added.

“We are evaluating these options as well. If we get good valuations, we may sell some of our coal-based plants as well. But this will take another two-three years. Till then we will try to commission our stuck projects,” he said.

Meanwhile, the company has sought easier terms of repayment for some of its power plants so it matches the life-cycle of the project.

Banks have given a go-ahead to that under the 5:25 refinancing scheme. The scheme extends loan repayment for infrastructure companies by up to 25 years, which can be refinanced every five years.

Essar Power has already restructured ₹10,000 crore under the 5/25 scheme and hopes to complete up to ₹18,000 crore in this calendar year.

Earlier this month, the company had said for the first time in 20 years of operations, it has turned around with a ₹39 crore net profit in FY16 and had expressed hope that it would be able to rake in a profit of ₹550 crore this fiscal.

In FY15, it had reported a net loss of ₹684 crore.

Essar Power has an installed capacity of around 58,600 MW but is able to operate only 3,600 MW as it has not been able to run gas-based 515 MW Hazira I and the 500 MW Bhande plant in Gujarat for the last three years due to non-availability of fuel.

Related Topics
comment COMMENT NOW