In a bid to retain control of the 1200 MW Mahan Power project in Madhya Pradesh, Essar Power has submitted a fresh debt resolution proposal to the banks. This includes an upfront cash payment of 70 per cent and the balance will be a mix of debt and equity.

This is part of their effort to bring down overall debt, by reducing its power business debt. Currently, Essar Power has a debt of Rs 20,000 crore.

A company spokesperson said, “As a policy we do not comment on specific financial discussions with banks.” The spokesperson added that Essar Group has reduced debt by Rs 1.3 lakh crore or 80 per cent of the group debt to banks over the last 2 years. In the same spirit, our plan is to reduce our power debt by 60 per cent to Rs 7,500 crore.”

Mahan thermal power plant is an independent power producer in Madhya Pradesh.

Essar Power’s Mahan project, was sent to the National Company Law Tribunal (NCLT) by the lender, ICICI Bank, seeking initiation of the insolvency proceedings against Essar Power MP.

Subsequently, ArcelorMittal offered lenders Rs 4,800 crore for Essar’s two 600 MW thermal power plants, exceeding the Ruia’s one-time settlement offer of Rs 3,500 crore.

The lenders for the project were Power Finance Corporation, Rural Electrification Corporation and Punjab National Bank. The lenders have not approved ArcelorMittal's bid as the company had set some conditions. This has given Essar group the opportunity to put in its bid.

This is the second time Essar group and ArcelorMittal are competing for the former's stressed assets. ArcelorMittal had emerged the winner to acquire Essar's steel business but that case is yet to find closure.

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