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Essar Energy secures second coal source to supply Mahan power project

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September 22, 2011 Bookmark and Share  

Essar Energy plc [LSE: ESSR], the India-focused integrated energy company, today announced that it has been allocated a share of coal from the Amelia coal block by the Madhya Pradesh state government to supply fuel to its Mahan I power project.

The allocation of a share of coal from Amelia gives Essar Energy a second source of fuel to supply Mahan I, a 1,200 megawatt power project, in addition to Essar’s existing Mahan coal block. The addition of Amelia will significantly extend coal availability from Essar’s captive blocks for Mahan I from the current estimate of approximately 12 years. Both blocks are within very close proximity to the power project.

The Madhya Pradesh state government has formally notified Essar Energy and another company, DB Mining Power, that they will jointly be allocated 40% of the coal from Amelia, which has been allocated to and will be operated by the Madhya Pradesh State Mining Corporation (MPSMC).

Amelia is estimated to have around 214 million tonnes of coal reserves, according to the Ministry of Coal. The block still requires environmental and other approvals before mining operations can begin.

Essar Energy will be supplied with its entitlement of coal from Amelia by MPSMC under a long term linkage arrangement once a Fuel Supply Agreement has been signed. The FSA is expected to be signed once the required environmental and other approvals have been obtained. The coal will be supplied at prevailing Indian coal linkage prices.

Essar Energy still expects to secure a separate shorter term tapering coal linkage arrangement to secure fuel for Mahan I until the Mahan block is producing sufficient coal.

Separately, the Government of India’s Empowered Group of Ministers continues to hold meetings to discuss forest clearances for  Essar Energy’s three coal blocks at Mahan, Chakla and Ashok Karkata,. These clearances are necessary to allow mining operations to begin. The Mahan block will supply fuel to Mahan I, which is due to be completed by March 2012. The Chakla and Ashok Karkata coal blocks will serve the nearby Tori I and Tori II power projects, which are due to be completed before the end of  March 2014.

For further information on Essar Energy, please visit www.essarenergy.com
For further information on the Essar Group, please visit www.essar.com

Alternatively, please contact:

Essar Energy
Mark Lidiard, Director of Investor Relations & Communications +44 20 7408 8714 or +44 7554 440421
Andrew Turpin, Head of Media Relations +44 20 7408 8702 or +44 7827 283659
Capital MS&L
Richard Campbell +44 20 7307 5334 or +44 7775 784 933
Nicholas Bastin +44 20 7255 5117 or +44 7931 500 066

About Essar Energy
Essar Energy (LSE:ESSR) is a world class, low-cost, integrated energy company with an established track record.
Essar Energy, through its subsidiaries, owns one of India's largest private power producers with 1,600MW of installed capacity and a further 8,070MW under construction.
Essar Energy, through its subsidiaries, owns 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 14.7 million metric tonnes per annum and plans to expand to 20mmtpa by September 2012.

About Essar Group
The Essar Group (the "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 25 countries across five continents, the Group employs over 70,000 people, with annual revenues of US$17 billion.
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This announcement contains certain forward-looking statements, including statements regarding Group's plans, objectives and performance. Such statements relate to events and depend on circumstances that may occur in the future and are subject to risks, uncertainties and assumptions. Although the Group believes that the expectations reflected in such forward looking statements are reasonable, 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, without limitation, 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. Further information on the significant risks and uncertainties associated with the Group's business is set out in the Prospectus published on 4 May 2010. These forward-looking statements speak only as at the date of this document. The Group undertakes no obligation to update any forward looking statements whether as a result of new information, future events or otherwise, except to the extent legally required.
These statements (and all other forward-looking statements contained in this document) are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Group's control, are difficult to predict and could cause actual results to differ materially from those expressed or implied or forecast in the forward-looking statements.
This announcement does not constitute, or form part of, an offer or any solicitation of an offer for securities in any jurisdiction, or an invitation or inducement to invest in the Group or any other entity and should not be relied upon in any way in connection with any investment decision.


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