Essar Gets Funding for Expansion, Still In Talks With Shell on Refineries

Essar Energy Plc, an Indian power generator that sold shares in London this year, spent over $1.5 billion on 16 projects in the first half and has raised over 80 percent of the debt financing needed to cover expansion plans.

Essar is seeking to boost its power generating capacity to 11,500 megawatts by 2014 from 1,220 megawatts. The company has about $2.5 billion of the debt funding it needs and is seeking an additional $1.2 billion, Chief Financial Officer Gerry Bacon said on a conference call today.

The Essar Group subsidiary, founded by billionaires Shashi and Ravi Ruia, raised $1.85 billion through an initial public offering in May. The equity funding has helped Essar attract the debt backing it needs for expansion plans as it seeks to meet rising Indian demand. About 45 percent of the country’s households do not have access to power.

“Indian demand for electricity and oil and gas outpaces supply,” Vice Chairman Prashant Ruia said on the conference call. While Essar wants to have at least 90 percent of its assets in India, talks with Royal Dutch Shell Plc to buy refineries in Europe “are still ongoing,” he said.

An 890-megawatt power plant adjacent to the company’s Vadinar refinery will be completed in the third quarter next year, Essar said. Two coal-fired plants with 1,200 megawatt capacity each will be operating by the second and third quarter of 2011.

First-half profit before tax rose to $233.6 million from $154.4 million a year earlier, Port Louis, Mauritius-based Essar said in a statement. P. Sampath will take over as chief financial officer in September, the company said.

To contact the reporter on this story: Kari Lundgren in London at Klundgren2@bloomberg.net

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