Essar Power Gujarat Limited has reinstated a power purchase agreement (PPA) to supply Gujarat’s state electricity utility with 800 MW over 25 years from the planned 1320 MW coal fired Salaya II project.

Gujarat Urja Vikas Nigam Limited (GUVNL) originally signed the PPA with Essar Power Gujarat – a subsidiary of Essar Energy plc, an India-focused integrated energy company – in May 2010. But Essar Energy announced on 19 August 2011 that it had terminated the agreement due to GUVNL failing to fufil certain conditions under the required timescale.

Essar Power Gujarat has now reinstated the PPA following satisfaction by GUVNL of all conditions subsequent relating to the agreement.

The PPA with GUVNL is to supply 800 MW of power over a 25-year period at a levelised tariff of 2.80 rupees ($0.057) /kWh, net of transmission costs.

The Salaya II power project, in Gujurat’s Jamnagar district, has two 660 MW generation units that would run on imported coal and are due online by the first quarter of 2014.

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