Growth focus

Calcutta, Nov. 2: 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.

“Coal India Ltd (CIL) 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,” said Partha S. Bhattacharyya, chairman of Coal India Ltd.

“The proposed step-in price will be lower than the landed price of imported coal,” he said.

According to Bhattacharyya, 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.

CIL has got applications from 58 companies, of which 39 are coal mining firms, with 12 of them being large global entities. Coal India is initially looking at four countries — Indonesia, Australia, Africa and the US. The US, in particular, is being tapped for its metallurgical and high-grade thermal coal.

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,” the CIL chairman said.

On how the strategic partnership will work, Bhattacharyya said CIL was open to all options, including equity participation. “CIL has a cash reserve of Rs 30,000 crore. Money is not a problem with us,” he said.

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 (with high gross calorific value) to consumers such as the DVC at an “import parity” price, which is 15 per cent less than the landed price of imported coal.

“Under the strategic tie-up, we would like to peg the coal price at that level,” Bhattacharyya said.

Divestment drill

CIL is likely to appoint a merchant banker soon to advise it on its proposed disvestment, according to PTI. The government may offload a maximum 10 per cent of its stake in the state-run firm. At present, CIL is 100 per cent owned by the government.

“Coal India may appoint a merchant banker soon to advise it on the proposed divestment,” a top coal ministry official said.

The coal major had recently held meetings with two such bankers, who made their presentations. The official clarified that it should not be confused with the investment banker, who was to be appointed after the divestment process starts.