Salaya power plant

From Global Energy Monitor

The Salaya power plant is a 1200 MW power station operated by Essar Power Gujarat, a subsidiary of Essar Energy for Gujarat, India. The power plant has gone through phases of being mothballed because it was unviable.


The aerial photo below shows the power station at the Essar refinery in Vadinar village, Khambalia taluk.

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Unit 1 (600 MW) entered commercial operation in April 2012. Unit 2 (600 MW) entered commercial operation on June 15, 2013. The plant is located near the company's oil refinery complex at Vadinar.[1]

Owner seeks tariff hike

Plant owner Essar had entered into an agreement with Gujarat Urja Vikas Nigam to supply 1,000 mw for 25 years from 2013 at a fixed tariff. The plant has been running on coal imported from Indonesia, but a change in law in Indonesia has substantially increased the price of its coal. This led Essar to file a petition for an increase in tariff. In a letter to lenders, Essar Power said: “[B]ased on current coal prices, there will be no cash flow available with the company for servicing interest and principal repayments. Therefore, a long-term viable solution for EPGL needs to be worked out along with lenders to ensure sustainability of the company.”[2]

Power station mothballed

In March 2021, Essar decided to close down its Salaya power station, stating that increased coal prices meant operating the power station was no longer viable. The power station was under contract to provide 1200 MW of power to the state-run utility Gujarat Urja Vikas Nigam Ltd (GUVNL), but the tariff stipulated in the power purchase agreement was too high for the company to break even.[3] Two other power stations in the area, the Tata Mundra Ultra Mega Power Project and the Mundra Adani Thermal Power Project, had also stopped supplying power to GUVNL due to high tariffs. But these two power stations agreed to resume their power supply in October 2021. Those two power stations have other customers besides GUVNL, whereas Salaya's sole customer was GUVNL. As of October 2021, the Salaya power station remains mothballed.[4]

During a period of high demand in April and May 2022, energy minister RK Singh held conferences with companies, banks, and state officials to discuss restarting commissioned but “non-operational” units. The plants considered appeared to include Salaya power plant, Butibori Power Project, Nasik RattanIndia Thermal Power Project, Simhapuri Thamminapatnam power station, Meenakshi Energy Thermal Power Project, Mutiara Coastal Energen Thermal Power Plant, and Cuddalore IL&FS power station. For Salaya, reporting noted the plant "can start operating the earliest as the Gujarat government can allow fuel cost pass-through and pay advance under the existing contract. Based on this advance, the lead lender SBI can issue a letter of credit to buy imported coal to run the plant."[5]

Later in May 2022, it was reported the plant was expected to get ₹7.08 per unit against ₹6.88 per unit earlier, meaning it would likely restart by the month-end once coal arrived.[6]

As of July 2022, it was unclear from Daily Coal Reports and other resources if the plant was operating again, but it was presumed to be.


In 2012, the company listed two additional stages as "under construction": coal-fired Salaya II (1320 MW) and the petroleum coke-fired Salaya III plant (600 MW). Stage II would use imported coal that has yet to be secured; Stage III would use pet coke from the Vadinar refinery. As of early 2014, these additional units were no longer mentioned on the website.[7]

However, in February 2016, the company applied for a terms of reference for a 2 x 660 MW expansion of the power station (Stage II). The units would be supercritical and powered by imported coal.[8]

As of June 2020, the project has not received a terms of reference, and plans appeared cancelled.


The plant is owned by London-based Essar Group, made up of the billionaire Ruia brothers of India. In 2016, it was reported the company had accumulated debt across several subsidiaries - problems that were exacerbated after the Supreme Court in September 2014 cancelled the majority of the country’s mine permits after ruling they were awarded illegally. In May 2016, the company said it was seeking to sell stakes in some domestic power plants to help reduce more than Rs20,000 crore ($3 billion) of debt.[9]

Fuel supply

The company states that coal for stages I will be based on imported coal from the company's "captive coal mine in Indonesia." Stage II will be based on imported coal that has yet to be secured. Stage III will use pet coke from the Vadinar refinery after the completion of the Phase I Refinery Project and coal from an unspecified source.[7]

The company intends that coal for the power station be imported through the proposed Salaya port, which it stated in its April 2010 Prospectus was being "developed by Essar Bulk Terminal, an Essar Affiliated Company."[10]

The company states that it has entered into a 25-year contract from 15 September 2010 with Essar Shipping and Logistics for the carriage of "3.6 to 4.4 mmt of coal per year in bulk from Richards Bay in South Africa, or Tanjung Bara in Indonesia, to the Salaya port in India."[11]

Power Purchase agreement

In its 2010, Prospectus Essar Energy states that on 26 February 2007, it "entered into a 25-year PPA with GUVNL for the sale of 1,000 MW per year of power, with power supply from the first and second units commencing in February 2011 and August 2011, respectively."[11]


In September 2009, a financing agreement for the project was closed. US$586.92 million in loans was provided by the State Bank of India, India Infrastructure Finance Company, ICICI Bank, Punjab National Bank, Allahabad Bank, and United Bank of India. US$195.64 million in equity was provided by Essar Group.[12]

In its April 2010 Prospectus, Essar Energy stated that "in May 2009 Essar Power Gujarat entered into a rupee denominated loan facility agreement with ICICI Bank Limited for Rs. 10.250 billion (US$219.58 million) and with Essar Power for Rs. 375 million (US$8 million)."[13]

Project Details

Sponsor: Essar Energy
Location: Vadinar village, Khambalia taluk, Jamnagar district, Gujarat
Coordinates: 22.3049, 69.7101 (exact)

  • Stage I: Operating
  • Stage II: Cancelled

Nameplate capacity:

  • Stage I: 1200 MW (Units 1&2: 600 MW)
  • Stage II: 1320 MW (Units 3&4: 660 MW)

Type: Stage I: Subcritical; Stage II: Supercritical
Start year: April 2012 (Unit 1); June 2013 (Unit 2)
Coal Type:
Coal Source: Stage I - coal from the company's captive mine in Indonesia; Stage II - imported coal
Estimated annual CO2: 14,192,882 tons from the coal-fired plant only
Source of financing: US$586.92 million in debt from the State Bank of India, India Infrastructure Finance Company, ICICI Bank, Punjab National Bank, Allahabad Bank, and United Bank of India; US$195.64 million in equity from Essar Group;[12] US$219.58 million in debt from ICICI Bank; US$8 million in equity from Essar Power[13]

Resources and articles


  1. "Salaya thermal power unit-2 achieves rare operational milestone," Essar Energy website, September 21, 2013
  2. "Essar Power asks lenders to work on debt recast," Economic Times, May 12, 2017
  3. Essar shuts power supply to GUVNL from Salaya plant, Times of India, Mar. 20, 2021
  4. Gujarat Urja Vikas Nigam Ltd gush: Prices crash on power exchange, Times of India, Oct. 19, 2021
  5. “Power Minister RK Singh to meet states, lenders on reviving stressed plants,” Economic Times, May 2, 2022
  6. "Fuel cost pass-through: Govt panel allows 6 gencos to raise charges by up to 20 paise a unit," Economic Times, May 30, 2022
  7. 7.0 7.1 Essar Energy, "Power,", Essar Energy website, accessed March 2012 and August 2014.
  8. "Form 1," India MoEF, Feb 9, 2016
  9. "Essar Power seeks to sell stakes in some plants to reduce debt," Live Mint, May 13, 2016
  10. Essar Energy, "Prospectus", April 2010, page 98. (Large pdf)
  11. 11.0 11.1 Essar Energy, "Prospectus", April 2010, page 99. (Large pdf)
  12. 12.0 12.1 "Preview of Salaya Coal-Fired Power Plant (1200MW) | Transaction | IJGlobal". Retrieved 2020-10-26.
  13. 13.0 13.1 "ESSAR ENEGRY PROSPECTUS". 2010.{{cite web}}: CS1 maint: url-status (link)

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