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Essar puts projects worth $3bn on hold

MUMBAI: Ruias-owned Essar Energy Plc has decided to put $3.1 billion worth of power projects, totalling 2,970 mega watts (MW), on hold as it struggles to get various approvals related to coal sourcing, environment and land acquisition. These projects include second and third phase of Salaya project in Gujarat and first phase of Navabharat power project in Bihar, which were scheduled to be commissioned by 2014.

“As a result of regulatory delays in the Indian power sector, and to ensure efficient deployment of capital, Essar Energy has also decided to progress the construction of three of its later stage power projects only against certain milestones. There have been continued delays in securing regulatory approvals, particularly relating to the environment and coal sourcing and land acquisitions,” Naresh Nayyar, MD Essar Energy, said without giving a timeframe of the delay or schedule commissioning of these projects.

Essar Energy shares, which are worth less than a third of their 2010 listing price, slumped over 12% to 110.6 pence in afternoon London trade on Monday, making the company the biggest loser on Britain’s blue chip index. In India, Essar Oil shares tanked 7.5% to Rs 61 in a weak Mumbai market on Monday.

The shares fell after the company reported a net loss of Rs 2,841 crore ($568.2 million) for the full year, compared with a profit of Rs 1241.5 crore ($248.3 million) a year ago. The company said profits were also badly impacted by the rupee’s 13% depreciation against the dollar since August. It said it has taken a $970 million exceptional adjustment in its 2011 financials to reflect a reversal of the sales tax benefit. Essar Energy is 77% owned by privately-held Essar Group and is the majority shareholder in India-listed Essar Oil which is trying to review an Indian court ruling ending removing its deferred payment of sales tax.

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Posted by on Feb 28 2012. Filed under Business India News. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.

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