“The Essar Power’s proposal of bringing $2 billion was discussed by the Foreign Investment Promotion Board (FIPB) in its meeting held on Friday, but it has been deferred,” official sources said.
The company has been asked to provide further details about the investment. Once recommended by the FIPB, the proposal is expected to be considered by the Cabinet Committee of Economic Affairs (CCEA) due to large size of foreign investment, the sources said.
The Essar Power, an arm of Essar Group, plans to bring over foreign investment through Essar Power Holdings (EPH) for equity investment in its proposed power projects across the country.
When contacted, the company officials declined to make any comment.
The sources, however, said that Essar Power, which is an unlisted company, proposes to transfer anywhere between 70% and 100% equity to EPH.
The company has plans to invest over Rs20,000 crore in the power sector in the next 1-2 years, although EPH would provide funds only for the equity stake.
Essar Group, which operates in the steel sector as well, also proposes to set up number of captive power plants apart from thermal and wind power projects in Jharkhand, Chhattisgarh and Tamil Nadu.
The sources said FIPB has also sought the comments of Ministry of Power and Ministry of Coal on the proposed investment. The Finance Ministry is also likely to closely examine the source of funding, share holding pattern of the EPH, they added.
Essar Power has sought one-time government approval to bring $2 billion of FDI, although it proposes to invest around Rs4,000 crore in the equity of power projects in the first year after getting approval.
The remaining amount is likely to be invested in the equity stake. With the present capacity of 1,200 MW, Essar Power aims to generate 6,000 MW by 2012 and is setting up plants in various states.