| Press
Releases |
| Essar Power
prepays Rs. 37 Crore facility from UTI |
| December
03, 2002 |
|
|
Essar Power has prepaid
its Non Convertible Debentures to Unit Trust of India ahead
of schedule. Essar Power had raised Rs. 37 Crores in 1997
to finance the Company's 515 MW combined cycle power plant
at Hazira. The interest on the NCD was 20%. This is in
line with the Company's initiative to reduce its cost of
finance and thereby tariff.
Essar Power Ltd. the first Independent
Power Plant to have entered commercial operations - is
aggressively pursuing its mission to become the lowest
cost IPP.
The two pronged strategy adopted by Essar Power,
first effecting reduction of variable charges to GEB and
also reduce its capacity charges are paying rich dividends
to GEB and Essar Steel over the past few months. |
Essar Power has spearheaded
the task to obtain exemption of Excise Duty on Naphtha
purchases that enabled reduction of variable charges by
as much as 18%. Secondly, with the support and co-operation
of Gujarat Electricity Board, the Company was able to obtain
exemption of Sales Tax on Naphtha in the State of Gujarat
- thus enabling a further reduction of about 18%. The strategic
location of the Power Plant near ONGC's Terminal at Hazira
enabled sourcing Naphtha without incurring any transport
cost. All these enabled the Company to be placed as one
of the lowest cost producer power amongst combined cycle
power plants in the State of Gujarat.
Pursuing its efforts
to further reduce variable charges the Company has switched
over its operations from naphtha feed to natural gas enabling
further savings. As a parallel effort, the Company has
renegotiated its term loans thereby successfully bringing
down interest rates by an average of 6% from the original
rate of around 20% contracted in 1994-95. These efforts
have enabled the overall tariff to be brought down from
Rs. 4.55 per unit to Rs. 3.00 per unit. |
Essar Power is the only
Independent Power Plant to have taken the pro-active initiative
of reducing its tariff to its customers while most of the
IPP's are continuing to pay interest at high cost of 18%
to 20% which burden is passed on to the cash strapped State
Electricity Boards.
Essar Power - which started commercial
operations in 1997, has consistently posted profits. Its
average revenues range at Rs. 800 Crores per year. Earnings
Before Interest, Depreciation and Taxes range around Rs.
450 Crores and Profits range around Rs. 50 Crores. The
Debt Equity of the Company which was at 2.07:1 at the time
of commissioning of the Power Project has been brought
down to 1.40:1 presently. |
Essar Power has been able
to manage collection of its current monthly invoices on
a regular basis from both GEB and Essar Steel Ltd.
Gujarat
Electricity Board - which procures power from 5 IPP's in
the State having an aggregate installed capacity 1941MW
(highest in India) has been performing admirably in meeting
its commitments and has chalked out positive strategies
to address its financing issues. GEB has been able to successfully
place Bonds for an aggregate value of over Rs. 1500 Crores
over the past couple of years. The recent switchover to
Gas by Essar Power and other IPP's would enable reduction
of tariff to GEB's consumers. |
Essar Power's aim is to
reduce its total tariff further to about Rs. 2.50/KWh and
thus becoming the lowest IPP in the country.
Essar Power
is a part of Rs 17000 cr. Essar Group which has presence
in six core sector areas of steel, shipping, oil & gas,
telecom and constructions. |
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