Essar power is raising 1100 crores from IDFC

Essar Power is developing a 270 MW of Thermal Power Project at Hazira, Gujarat. The estimated cost of the project is Rs. 1,433 Crs. Essar is planning to fund the project by D:E ratio of 80:20. For the debt portion, Essar Power is raising around Rs. 1,100 Crs from IDFC (Infrastructure Development Finance Company) with the interest rate of 8-10%. Essar has achieved financial closure for this transaction.The project is likely to be commissioned in 2012. The transaction is being routed through Essar Power Hazira, a special purpose vehicle floated by Essar Power, which is setting up a multi-fuel based captive power plant in Gujarat. The proposed plant is being set up as captive project to meet the energy requirement of Essar Steel, which is setting up a 5 MT integrated steel plant at the same location. EPC and BTG contracts have been placed with repuded suppliers and contractors.

Essar Power currently operates three power plants — two in Hazira with a combined capacity of 1,015 MW and one in Vadinar with a capacity of 125 MW. The company has also embarked on an expansion plan to increase the installed capacity to 6,000 MW over the next three years.

Earlier, IDFC through India Infrastructure Fund (IIF) invested Rs 350 crore for a 1.5% stake in Essar Power to fund the latter’s expansion plans. The transaction valued the unlisted power entity at Rs 23,000 crore. IIF is sponsored by IDFC, Citigroup and IIFCL and has been set up as part of the India Infrastructure Financing Initiative that was launched last year to deploy $5 billion in capital for infrastructure projects across the country.

The energy sector accounts for over 40% of the total exposure of IDFC. The company has financed power plants of over 14,000 MW, including more than 600 MW of renewable assets and is present across the value chain in the power sector.