London, UK – Essar Energy plc (LSE:ESSR), the India-focused integrated energy company, today announced that its indirect subsidiary, Essar Power Jharkhand Limited (EPJL) has signed a Power Purchase Agreement (PPA) with the Bihar State Electricity Board (BSEB) for 450 MW of contracted capacity from the 1,200 MW coal fired Tori I power project to be located in Latehar district, Jharkhand, India. The PPA is valid for a period of 25 years from the start of commercial operations. Under the terms of the PPA, EPJL will supply power to BSEB at a levellised tariff of Rs. 2.64 per kwh (approx. US cents 5.62 per kwh). EPJL was awarded the contract following a competitive bidding process.
EPJL is required to make available 25% of Tori I capacity to the Jharkhand Government with a right of first refusal to the Government and a further 12% capacity to be supplied to the Government at variable cost. The balance of power from Tori I can be sold by EPJL on the open market.
Commenting on this agreement, Mr Naresh Nayyar, CEO of Essar Energy said, “The signing of the power purchase agreement with BSEB completes the offtake arrangements for the Tori I power plant. This is a further milestone towards securing our long term revenue stream and increasing our generation capacity from 1,220 MW to more than 11,000 MW by the end of 2014“.
The Tori I project will be a pit-head coal fired power plant comprised of two generation units of 600 MW capacity each. The Tori I project will source coal from the nearby Chakla and Ashok Karkata coal blocks that were allocated to this project in 2007. These mines will be developed and operated by EPJL and first coal will be delivered to the power plant through a dedicated conveyor system from the Chakla coal block. EPJL has applied to the Government of India for a temporary coal linkage of 5.4 mmtpa from Coal India for in the event that the Chakla coal mine does not comments operations in time for the start-up of the power station.
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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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