SAIL, NTPC, CIL, RINL ready $2.3b war chest to buy coal assets abroad
Major coal consumers, Steel Authority of India Ltd (SAIL), National Thermal Power Corporation (NTPC), Coal India (CIL) and Rashtriya Ispat Nigam (RINL) are planning to set up a joint venture for acquiring coal assets abroad.
By Subhash Narayan, TNN |
NEW DELHI: Major coal consumers, Steel Authority of India Ltd (SAIL), National Thermal Power Corporation (NTPC), Coal India (CIL) and Rashtriya Ispat Nigam (RINL) are planning to set up a joint venture for acquiring coal assets abroad.
The special purpose vehicle (SPV) is proposed to have a war chest of around $2.3 billion (Rs 10,500 crore). The new entity will also rope in private sector companies like Tata Steel and “other reputed MNCs” as partners in specific projects, sources said. The four partners will contribute an equity component of Rs 3,500 crore in the venure.
“The proposal for the four-way joint venture would soon be placed before the boards of all the PSUs. Once approved, it would be placed before the Cabinet,” an official said. The steel ministry has already asked both power and coal ministries to examine the new venture.
As per the proposal, SAIL, NTPC, CIL would contribute Rs 1000 crore each equity for the new entity while RINL would put in Rs 500 crore. Based on this equity, the company would leverage debt of about Rs 7,000 crore taking the size of warchest to Rs 10,500 crore.
The proposal also includes powers of a navratna company for the new entity. It would, however, be kept outside the purview of CVC guidelines for facilitating quick clearances for large acquisitions. The new entity would be placed directly under control of an empowered committee of secretaries with full powers on the lines similar to empowerment for oil block acquisition. Heads of all the four PSUs would participate in its board.
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The new venture has been proposed as an alternative to proposed plan to set up Coal Videsh (CVL) as a subsidiary of CIL. Sources said, if the proposal of CVL is cleared, then SAIL, NTPC and RINL may be asked to join it as equity partners or jointly participate in its projects. The new venture has been proposed to present a strong Indian contender in a highly competitive international market for securing energy resources. The venture would also help in meeting the coal shortages, particularly of coking coal, with imports expected to rise to 70 million tonnes by 2019-20. Even non-coking coal import is expected to rise to 26 million tonnes by that time.
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