London, UK – Essar Energy plc (LSE:ESSR), the India-focused integrated energy company, today announced that its subsidiary, Essar Power Limited (EPL), has entered into binding agreements for the acquisition of a 100% interest in Navabharat Power Pvt. Limited. EPL will initially acquire 76% of the existing equity with balance 24% being acquired upon completion of certain project milestones. Navabharat Power is a 2,250 MW coal-fuelled power plant (Project) being set up in Dhenkanal district, Orissa, India. The Project is being implemented in two phases; the first phase of 1,050 MW and phase two of 1,200 MW at a total estimated capital cost of US$ 2 billion. The Project includes the allocation of the Rampia Coal block of 112 million metric tonnes and a 4.7 million metric tonnes per annum tapering coal linkage with Coal India Ltd.
Phase 1 of the Project already has in place a number of approvals including environment clearances. All other approvals are being progressed, including land acquisition. Phase 1 is expected to achieve financial closure by end of CY2010. The advanced stage of the approval process is expected to save about 2 years in execution time compared to a greenfield investment.
Commenting on today’s agreement, Mr Naresh Nayyar, CEO of Essar Energy said, “Navabharat Power is a major part of our power phase II development projects. This acquisition is in line with the plans announced at the time of our IPO and will keep us on track to develop over 11,000 MW of power capacity by the end of 2014, thereby maintaining our leading position in the private sector power generation market in India.“
Proceeds from the IPO of Essar Energy plc, completed on 7 May 2010, included the equity contribution for these Projects (Formerly Neptune) phases 1 and 2. Both phases are scheduled to reach commercial operations by the end of 2014.
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About Essar Energy
Essar Energy (LSE:ESSR) is a world class, low-cost, integrated energy company with an established track record.
Essar Energy is India’s second largest private power producer with 1,200MW of installed capacity and projects under planning and construction to expand its capacity to 6,100 MW in Phase I and 11,470 MW in Phase II.
Essar Energy is one of India's fastest growing private sector oil and gas companies with a diverse portfolio of exploration and production assets. The Vadinar refinery, located in Gujarat, is India's second largest private sector oil refinery with throughput capacity of 14mmtpa and plans to expand to 18mmtpa by March 2011.
About Essar Group
The Essar Group is a multinational conglomerate and a leading player in the sectors of Steel, Oil & Gas, Power, Communications, Shipping Ports & Logistics, Construction and Minerals. With operations in more than 20 countries across five continents, the Group employs 60,000 people, with revenues of USD 15 billion.
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This announcement contains certain forward-looking statements, including statements regarding Group’s plans, objectives and expected performance. Such statements relate to events and depend on circumstances that will occur in the future and are subject to risks, uncertainties and assumptions. There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by such forward looking statements, including, among others the enactment of legislation or regulation that may impose costs or restrict activities; the re-negotiation of contracts or licences; fluctuations in demand and pricing in the Oil and Gas, Power and Energy industries; fluctuations in exchange controls; changes in government policy and taxations; industrial disputes; war and terrorism. These forward-looking statements speak only as at the date of this document.
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