NTPC wants to remain a part of International Coal Ventures Pvt. Ltd (ICVL), set up by the government to acquire overseas assets, so it can leverage the entity’s other constituents to secure coal resources, a top executive said.

The steel ministry is considering restructuring ICVL and has suggested
that NTPC and another state-run firm, Coal India Ltd, exit from it.

ICVL’s other constituents are Steel Authority of India Ltd, Rashtriya Ispat Nigam Ltd and NMDC Ltd.

“All the companies together have greater strength,” said R.S. Sharma,
NTPC’s chairman and managing director. “We are keen to continue with
the present arrangement.”

ICVL was set up by the five state-owned firms to secure coal companies,
mines and blocks overseas, with a total equity capital of around $2
billion (Rs9,300 crore), but it has not been able to secure assets till
date.

Steel minister Virbhadra Singh said on Sunday that NTPC and Coal India
could exit ICVL if they did not want to participate in buying coal
assets abroad, PTI reported.

Coal India chairman Partha S. Bhattacharyya did not respond to phone calls or a message to his cellphone.

“Let the government of India decide on the issue,” said Union power secretary H.S. Brahma. The power ministry oversees NTPC.

While ICVL was looking to acquire coal mines in Australia’s East Bargo
area and in the US, NTPC and Coal India have been independently
scouting for coal resources overseas.

Coal India has a wholly-owned subsidiary, Coal Videsh, to acquire coal
mines abroad; NTPC is looking at mines in Mozambique, South Africa and
Australia.

NTPC’s Sharma said the interests of the steel companies in the special
purpose vehicle wouldn’t be affected as the utility was looking at
independently sourcing only non-coking or thermal coal, whereas ICVL’s
mandate was to source both coking and non-coking coal. “No one is
working against each other,” he said.

Dipesh Dipu, an expert on the mining sector, said ICVL should try to resolve the issue.

“Equity investment in a growing concern may not be easy to monetize as
an exit option, more so in a closely held government-owned company,” he
said. “It may require fair value assessment of shares and replacement
of shareholders, which may be other public sector undertakings, through
sale and purchase.”

Coal is critical for NTPC as at least 80% of its installed capacity of
31,1354MW is coal- based. A majority of its coal-based projects don’t
have sufficient stock of the fuel.

India has 256 billion tonnes of coal reserves, of which around 455
million tonnes (mt) is mined every year. The country imports around
40mt of coal.

But demand for coal is expected to reach around 2 billion tonnes a year
by 2031-32, about five times the current extraction, with most of this
coming from the power sector.

With 67% of India’s total power generation currently based on coal, the
power sector is the major consumer of the fossil fuel in the country,
absorbing nearly 78% of the total domestic production.

ICVL is competing with Chinese firms such as China Shenhua Energy Co.
Ltd and Yanzhou Coal Mining Co. Ltd to acquire scarce coal assets
overseas.

Analysts say bids by Indian miners tend to be uncompetitive as most
Indian firms seek coal for their own end-use projects, while rival
bidders may have higher-margin plans.

Source: Livemint

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