Essar Power signs PPA with Gujarat for 800 MW from Salaya-II Power plant

Essar Power signs power purchase pact with Gujarat for 800 MW of contracted capacity from the 1,320-MW coal-fired Salaya II power project.

Essar Energy plc has announced that its indirect subsidiary, Essar Power Gujarat Ltd (EPGL), has signed a power purchase agreement (PPA) with Gujarat Urja Vikas Nigam Ltd (GUVNL) for 800 MW of contracted capacity from the 1,320-MW coal-fired Salaya II power project to be located in Jamnagar district. The PPA is valid for 25 years from the start of commercial operations. Under the terms of the PPA, EPGL will supply power to GUVNL, promoted as a power transmission company by the State Government, at a levelised tariff of Rs 2.80 per unit . EPGL was awarded the contract following a competitive bidding process. The balance of power from Salaya II can be sold by EPGL on the open market, a company spokesman said here in a statement.

Commenting on the PPA, Mr Naresh Nayyar, CEO of Essar Energy, said the agreement will further the progress of the company's Phase II development plans to increase its generation capacity from 1,220 MW to more than 11,000 MW by the end of 2014. Salaya II will consist of a 1,320 MW expansion to the 1,200 MW coal-fired Salaya I plant that is currently under construction. Salaya I is likely to start commercial operations in the second quarter of 2011. GUVNL is contracted to purchase 1,000 MW of power from Salaya I under a separate long-term PPA, with the balance available for sale in the merchant market.

Once completed, Salaya I and Salaya II will have a total installed capacity of 2,520 MW.Essar Energy is a low-cost, integrated energy company and India's second largest private power producer with 1,200 MW 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.