Essar Power to terminate 800 MW PPA with GUVNL…

Spark learnt from the reports that the Essar Power Limited has issued one week notice for terminating its PPA singed with GUVNL for supplying 800 MW of Power for next 25 years.

Essar Power has earlier signed a PPA with Gujarat Government for supplying 800 MW for Power for next 25 years at the tariff of Rs. 2.80 per unit. However, it seems that currently Essar Power does not want to continue with the arrangement and has issued a one week termination notice to GUVNL.

 

As per the Essar Power statement,  "This (PPA termination) decision follows the failure by GUVNL to satisfy certain conditions under the PPA within the required timescale."

However, as per the Spark’s analysis, the increasing imported coal prices have made many power projects (including Essar’s) unviable. Essar Power is commissioning 1320 MW of imported coal based project at Salaya in Saurashtra region of Gujarat.

Meanwhile, Essar Power stated that the company remains committed to the Salaya power project and will be reviewing its options with regard to power sales. Proposed project is currently scheduled to commission in Q1 2014.