Mumbai/New Delhi: Essar Power Ltd., owned by the billionaire Ruia brothers of India, is seeking to sell stakes in some domestic power plants to help reduce more than Rs20,000 crore ($3 billion) of debt.
“We will look at plant-specific deals,” Essar Power executive vice chairman Sushil Maroo said in an interview. “We are looking at removing uncertainty and improving the valuations.”
The company, a unit of London-based Essar Energy Ltd., has accumulated debt across several subsidiaries that were set up to own and operate projects. Its woes were exacerbated after the Supreme Court in September 2014 cancelled the majority of the country’s mine permits after ruling they were awarded illegally, stripping several steel and power companies of their sources of fuel.
Essar won one coal mine in the eastern state of Jharkhand in the government auctions following the ruling and now expects to report a profit in the year ending March. Coal from the mine will fire the company’s 1,200 megawatt project at Mahan in central India.
“We will have to wait for three to four months for unit one to go to 600 megawatts and unit two to start and ramp up to 600 megawatts,” Maroo said. “Six months from now we will have positive numbers.”
The project is currently using coal bought through auctions conducted by state-owned Coal India Ltd.
Maroo also expects the company’s 1,200 megawatt Salaya plant, which uses imported coal from Indonesia, Mozambique, Colombia, Australia and South Africa, to report a profit this year because of the global slump in coal prices. Thermal coal at Australia’s Newcastle port, an Asian benchmark, has declined 57% over the past five years.
Essar Power is a part of the Essar Group, which is seeking to sell a stake in unit Essar Steel Ltd. and has signed an agreement to sell a 49% stake in Essar Oil Ltd. to Russia’s Rosneft to pare debt.