The hunt begins

Calcutta, April 17: Bharat Heavy Electricals (Bhel) is considering a joint venture that will buy gas being extracted from coal reserves in a Coal India-ONGC project.

Sources said Bhel, the central public sector undertaking which manufactures power and telecom equipment, has initiated talks with the coal major on the issue.

?Bhel is keen to buy gas from us to run their gas turbines. It has already held a few rounds of talks on the matter, wants to expand its business quickly and is open to the idea of a joint venture,? senior officials of CIL said.

Bhel has kept an ambitious target of achieving a turnover of Rs 11,000 crore in this fiscal.

CIL officials said the talks will gain a new momentum once the coal ministry clears the coal-gassification project. ?We expect to get the green signal soon,? they added.

Coal India has decided to form a 50:50 joint venture with ONGC for underground coal gassification ? an option being tried out for the first time in the country. It holds out the hope of a big increase in power generation.

ONGC, which will enter underground coal gassification project in a big way, had offered Coal India a 10 per cent stake in the project, with the option of raising it to 26 per cent.

However, Coal India refused to settle for anything less than an equal holding in the venture. The deal was agreed on only a few months back.

As part of the agreement between the two companies, Coal India will invest Rs 50 crore in the project initially. The partners will take up a pilot project in Sayal region under Central Coalfields, a subsidiary of Coal India.

ONGC has agreed to compensate Coal India for the reserve value of its resources. The two partners will reach an agreement on the share of Coal India for land used in the project ? which will come up in an area where coal mining is not cost-effective because of geological problems.