Regulatory issues impacting power industry in India: Essar Energy

MUMBAI: London-listed Essar Energy says that regulatory and coal supply issues have impacted the entire power industry in India. The company said it commenced commercial operations at Salaya I (unit I) 600MW, in April 2012 and at Salaya I (unit 2) 600MW, in June 2012.

"Overall, therefore, we have added 1,580MW of installed capacity since the start of 2011. This takes Essar Energy's total operational capacity to 2,800MW. However, regulatory issues continued to cause delays, notably with regard to Government clearances to begin mining operations at the coal blocks previously allocated to Essar Energy's Mahan and Tori power projects."

The company also said, "The Indian Association of Power Producers and senior executives from several member power companies, including Essar Power, held a meeting with the Indian Prime Minister and his ministerial colleagues to discuss options for resolving a number of the issues.

These included the need for much improved supplies from Coal India, the state-owned producer, and long delays in decision making on approvals to allow mining to begin at captive coal blocks previously allocated by the Government to power projects. These delays have particularly involved environment and forest clearances."

Against this backdrop, Essar Energy believes that its decision in February this year to progress construction of three of its later stage coal-fired power projects only against the achievement of certain milestones was the right decision allowing us to manage risk and focus on completion of its other under construction projects, said the company.