Ispat Energy's 367mw captive power project which is currently in the initial stages of construction is being set up adjacent to Ispat Industries' hot strip mill complex at Dolvi. Ispat Energy is expected to meet the entire energy requirements of the Dolvi complex. The combined cycle power plant configuration will comprise a second hand power plant of 55mw and 312 mw, both being supplied by ABB. Ispat Industries, which are the promoters for the project, have brought in Rs 110 crore as equity in the project. The balance will be brought in as the project progresses. The total equity component for the project is Rs 468 crore with a debt component of Rs 1,013 crore. The project cost, as appraised by IFCI, has been estimated at Rs 1,481 crore. The company has already received the sanction letter from the financial institutions for a major part of the debt requirement. Global power major Enron Corp had earlier reached an agreement on terms to purchase close to 49 per cent equity in Ispat Energy. The company hasalready started civil construction work at the site and expects to commission the plant by 2002.

Ispat's current energy requirement is met by the state grid. The company's total energy requirement after the 3 million tonnes (mt) hot-rolled coil project is ready will be 280mw during peak time. The power plants are capable of using both blast furnace gas and LNG, however, the main fuel for the plant will be LNG which will be supplied by Enron.

Enron Energy Marketing Services, a wholly-owned subsidiary of Enron Corp, has signed a gas sale agreement (GSA) with Ispat Energy whereby the company will supply natural gas to its captive power plant.

Under the terms of the GSA, Enron will supply 0.2 mt per annum of LNG over a 20-year period to Ispat Energy. The gas delivery is expected to commence in the third quarter of 2002.The gas will be transported from LNG processing terminal at Dhabol via pipeline to Ispat's plant at Dolvi. Metropolis gas, a wholly owned subsidiary of Enron, is currently developing the pipeline.