CIL working on strategic tie up with overseas coal producers
Wednesday, 04 Nov 2009
The Telegraph reported that Coal India is working on strategic tie ups with overseas coal producers to import the dry fuel at rates less than the landed price. The country is expected to import 100 million tonnes of coal by 2013.
Mr PS Bhattacharyya chairman of Coal India Ltd said “Coal India Ltd has invited expressions of interest from foreign producers for strategic partnerships to develop or expand production at mines located abroad and import that coal to India on a cost-plus price basis.”
He said that “The proposed step-in price will be lower than the landed price of imported coal.”
Mr Bhattacharyya said a high demand in India will ensure an assured market for the foreign partners, while the domestic consumers will be protected against price fluctuations in international markets.
He said that the CIL board has also formed an empowered committee to shortlist the applicants and look into their proposals. In the first phase, we have shortlisted 12 companies on the basis of a cut off level of their production. We’ll consider other applicants in the second phase.
On how the strategic partnership will work, Mr Bhattacharyya said CIL was open to all options, including equity participation. CIL has a cash reserve of INR 30,000 crore. Money is not a problem with us. He added that “Under the strategic tie-up, we would like to peg the coal price at that level.”
According to the report, the empowered committee will start examining the proposals of the 12 shortlisted companies by the end of November. Presentation formats are being sent to the applicants now. At present, Eastern Coalfields Ltd, a CIL subsidiary sells its grade A and B category coal to consumers such as the DVC at an import parity price which is 15% less than the landed price of imported coal.
