Essar may enter power trading, to restart Vadinar refinery work

The Rs 17,000 crore multi-diversified Essar group, which is the country's first independent power producer (IPP), is now looking at the opportunities in the power trading and distribution business.

The group's company, Essar Power Ltd (EPL), has applied for power trading license from the government of India.

The group's director and managing director of the Essar Steel Ltd, Prashant Ruia, on Monday said the construction work on the group's upcoming oil refinery at Vadinar in Jamnagar district which has been halted for more than one year, will restart during this quarter and the refinery will be fully operational by December, 2005.

"With the new Electricity Act-2003 in force, we are seriously looking at the potentials in the power trading and distribution segment and at present, we are surveying the prospects in this segment following which, in another six months of time, we will decide about how to proceed in the power trading and distribution business. We are also planning to go for a massive expansion of capacity of our power production which is based in Gujarat. We may opt for adding 1000 MW capacity at our Hazira power plant under EPL or may go for a new power plant at Vadinar, close to our oil refinery with 1000 MW capacity," Ruia said on Monday.

EPL has been producing 515 MW of power from its plant at Hazira in the outskirts of Surat city and selling 300 MW to the Gujarat Electricity Board (GEB) and the rest 215 MW to Essar Steel plant at Hazira itself.

EPL has also initiated the process of looking for manpower to be added in its team, specially to handle its initiatives in power trading and distribution.

Talking about Essar Oil's future plans, Ruia said construction of the 12 million tonne per annum (MTPA) capacity oil refinery at Vadinar in Jamnagar will restart during this quarter of the current fiscal year and the refinery will start operating from December, 2005.

"We are going to invest Rs 4,000 crore for completion of the refinery's construction work which is in addition to our investment of Rs 6,500 crore which already has been made. We have initiated the work of revalidating contracts with our private contractors for the refinery work and manpower mobilisation also has been started to meet the set target of completion of work at the site in next 23 months," Ruia said.

Essar Oil, which at present runs three retail petroleum outlets including one at Jamnagar, is importing petroleum products to cater to the needs of the retail outlets.

"We are planning to open 1,700 outlets during the next two years in which 300 outlets will be opened in Gujarat and work in this direction already is at an advanced stage. We are also going to invest Rs 300 crore during the next three years for our project in the coal bed methane (CBM) exploration segment which has a rich potential," Ruia said.

Essar Oil has its CBM sites at Mehsana which includes two blocks. Its Ratna and R series oil fields have an estimated 500 million barrels of oil in addition to its five exploration blocks.

EOL has so far been awarded six CBM blocks by the Union government in which two blocks, one at Rajasthan (RJ-ON-90/4) and another in the Saurashtra region of Gujarat (BB-OS-5) have already been relinquished by the company, while its CBM block at Cachar in Assam (CR-ON-90/1) has remained so far as a non-operated block.

It has been operating on three blocks including one in Gujarat and one each in Rajasthan (RJ-ON090/4) and at Ranigunj in West Bengal (RG/East-CBM-2001/1).