Essar Energy Plc on Monday reported a 49 per cent jump in earnings for the first half of 2011 on the back of higher refinery margins, but the London-listed firm said it continues to battle delays related to regulatory approvals for its projects.

Essar Energy's H1 earnings before interest, tax, depreciation and amortisation (EBITDA) were up 49 per cent to USD 477.9 million, while pre-tax profit was up 80 per cent to USD 278.5 million, CEO Naresh Nayyar said in a conference call.

"The first half of 2011 has been a mixed period for the company. Operational performance has been good, with a solid performance at our Vadinar Refinery (in Gujarat) and high availability across our power plants."

"This, together with a significant uplift in refining margins, has delivered a strong financial performance, with profit-before-tax up 80 per cent to USD 278.5 million," he said.

Essar said it is still awaiting forest clearance from the government for its Mahan, Chakla and Ashok Karkata coal blocks, which will provide fuel for its Mahan-I and Tori power stations.

"We continue to experience delays due to slow progress with certain regulatory approvals, particularly for our coal blocks in India and Indonesia," Nayyar said.

"... Delays to regulatory approvals and delays to the access of fuel supplies are a cause for concern," a company statement said. "Not only do these delays impact the economic returns on projects, but they are acting to discourage investment in the sector from project sponsors, debt providers and equity investors."

Essar said four major projects are on course for completion in the coming months, which according to analysts' consensus, will add around USD 2 billion to Essar Energy's EBITDA, taking the total to USD 2.7 billion in FY'2013, compared to USD 718 million delivered in FY 2010.

Phase-I expansion of the Vadinar Refinery, Nayyar said, was on track for completion by the end of 2011. This would increase the capacity of the refinery to 375,000 barrels a day from 300,000 bpd now.

Together with Essar's recently acquired Stanlow Refinery's 296,000 barrels a day capacity and half share of Mombasa Refinery's 80,000 barrels, Essar Energy's capacity will be increased to 710,000 bpd, he said.

Further, the company is implementing a refinery optimisation project at Vadinar, which will increase its capacity to 405,000 bpd by September, 2012.

The three power projects -- the 1,200-MW Salaya I, 1,200-MW Mahan I and 510-MW Vadinar Phase 2 projects -- totalling 2,910 MW, would be completed by March, 2012.

"Together, these will almost triple Essar Energy's operational generation capacity to 4,510 MW by next March, against 1,600MW today," he said.

A further seven power projects are under construction, which will take Essar Energy's overall generation capacity to 9,670 MW by March, 2014.

Nayyar said the Vadinar Refinery produced 53 million barrels in H1, 2011, well above its annual nameplate capacity of 10.5 million tonnes.

It earned USD 8.30 on turning every barrel of crude oil into fuel in H1, compared to a USD 6 per barrel gross refining margin in the year-ago period.

A company statement said forest clearance is delaying the development of a number of coal blocks and an Empowered Group of Ministers (EGoM) was formed by the Prime Minister's Office to resolve all cases where significant progress has been made on construction of the power plant.

"Despite a visit to our sites by an inter-ministerial group in July, 2010, and a favourable recommendation and four EGoM meetings to date in 2011, we have not yet received approval for our sites to move from a 'no-go' to a 'go' area, which would facilitate forest clearance for these blocks.

"While we remain optimistic of a favourable outcome, it will still take 15-18 months to produce first coal from the Mahan block once we have moved to a 'go' area. As a result, we will not be in a position to supply coal from our captive mine ahead of the commissioning of the 1,200-MW Mahan I coal-fired power project, the first unit of which is due to commence to commenced operations in September, 2011," it said.

Essar said it has applied to state-owned Coal India Ltd for a tapering coal linkage and has registered to bid for 'e-auction' coal to secure temporary coal supplies until its own mines are operating at full capacity.

"We expect to receive a tapering coal linkage only once the EGoM has resolved the 'go'/'no-go' issue. We are already preparing to bid for 'e-auction' coal to ensure that we have sufficient coal ahead of the commissioning of Mahan-I," it added.