Essar Energy, on Monday, said it had received provisional forest clearance from the Group of Ministers (GoM) for its Mahan coal block in Madhya Pradesh. It also announced that operations of the 380-MW Vadinar P1 gas-fired power station had commenced.

The coal-fired Vadinar P2 project, with a total 510 MW capacity, is one of three power plants being completed by Essar Energy during 2012. The 1,200-MW Salaya I project has already been fully commissioned, and is commercially operational, while the 1,200-MW Mahan I project is expected to be synchronised shortly. Together, these three projects will take Essar Energy’s total installed capacity to 4,510 MW.

Most of the power generated by Vadinar P2 will be sold to Essar Oil’s refinery at Vadinar, which will help improve margins at the oil refinery given the relative lower cost of coal-fired generation. Some power will also be sold to Essar Steel and some in the merchant market. Naresh Nayyar, Essar Energy chief executive, said “the synchronisation of unit 1 at Vadinar P2 is another step forward for our power business. When it is commercially operational, this project will also improve margins at the refinery.”

Essar Energy stated that it had put in place a mechanism for buying coal from international and domestic sources to meet any contingency. It said it had also commissioned the Phase-1 expansion of its flagship Vadinar refinery in Gujarat, enhancing the capacity to 3.75 lakh barrels a day from 3 lakh barrels.“A further optimisation project, taking the capacity to 4.05 lakh barrels a day, was commissioned this month, 4 months ahead of schedule,” the statement added.