"We hope to achieve financial closure for the project in the next three to four months. After that, it will take two years to complete the first phase of 750 MW and the second phase will be ready 12 months later," the Essar group Director, Mr Prashant Ruia, said today at the inauguration of a 100-MW captive power plant for Essar Steel.

Essar has already signed a power purchase agreement with Power Trading Corporation (PTC) and tied up gas with the Gujarat State Petroleum Corporation (GSPC) for the proposed power plant. As of now, the project is awaiting environmental clearance from the Centre. The project will cost nearly Rs 4,000 crore, Mr Ruia said, but declined to give further details on the quantum of debt and equity that would go to fund the power plant. The new combined cycle power plant will use gas to run a turbine and then trap the extra heat to produce steam. The steam in turn will be used to produce more power.

At present, Essar Power operates a 515-MW plant at Hazira. It sells 300 MW to the Gujarat Electricity Board and the rest to its sister company Essar Steel. Essar claims to have the lowest manpower to MW ratio for any power plant in the country and its energy efficiency measures have helped the company increase its production by nearly 4 MW.

Mr Ruia said that the ongoing capacity expansion of the Essar Steel plant at Hazira is going as per schedule and the company hopes to increase its steel production from 2.4 million tonnes per annum (MTPA) to 4.6 MTPA by 2006-end.

The first stage of Essar Steel's captive power plant was inaugurated by the Gujarat Energy Minister, Mr Saurabh Patel, on Thursday. Built at a cost of Rs 283 crore, the plant has started generating 100 MW power. Once the heat recovery and steam turbine becomes operational by October, the plant will produce 155 MW power.

Essar Power is also constructing another 200 MW combined cycle power plant for Essar Steel. The project will cost Rs 450 crore and will go on stream by 2006 to coincide with the capacity expansion of the Essar Group's steel production at Hazira.