OREANDA-NEWS. May 11, 2012. Essar Energy plc [LSE: ESSR], the India-focused integrated energy company, today announced that it has signed a power purchase agreement (PPA) with Noida Power Company Ltd for 240 megawatts (MW) of contracted capacity from Essar Energy’s 600MW coal-fired Tori II power station which is under construction in Jharkhand state, India.

The binding PPA has been signed by Noida Power Company Ltd with Essar Energy’s subsidiary Essar Power Jharkhand Limited (EPJL) and has a 25 year duration.

The PPA was secured following a competitive bidding process, with supply of power under the terms of the PPA being due to commence from April 2014.

Under the terms of the PPA, Essar Energy will supply power at a delivered levelised tariff, including transmission costs, of Rs.4.08 per kilowatt hour (approximately 7.6 US cents per kWh), which is the highest long term tariff achieved through competitive bidding in India to date. The levelised tariff net of transmission costs is Rs. 3.27 per kWh (approximately 6.2 US cents per kWh).

The agreement is the first PPA that has been signed for the Tori II project. At its 1,200MW Tori I project, which is also under construction, Essar Energy has already signed two PPAs of 300MW and 450MW, both for 25 years, with the Bihar State Electricity Board.

Naresh Nayyar, chief executive of Essar Energy, said: “We are pleased to have concluded this agreement with Noida Power. We continue to make good progress in securing long term revenues from our power generation projects in India.”

Essar Energy currently has 2,200MW of generation capacity operational, with a further 2,310MW of capacity due to be commissioned this year at the Salaya I, Mahan I and Vadinar P2 projects. Beyond this a further four power projects are due to be commissioned by March 2014, including the Tori I and Tori II projects, which will take Essar Energy’s total to 6,700MW by that date.