Hyderabad: NTPC Ltd, India’s biggest power producer, has appointed a consultant to evaluate two medium-sized coal mine acquisitions in Mozambique and Indonesia even as it plans to exit International Coal Ventures Pvt. Ltd (ICVL), a consortium of state-run firms formed to buy overseas coal mines.
“These (Mozambique and Indonesia) deals are at present on the verge of getting materialized,” said a senior NTPC executive, asking not to be identified and declining to name the consultant or the mines as the deals are still being evaluated.
NTPC needs 166 million tonnes (mt) of coal in the year to 31 March, of which around 16 mt has to be imported. The company has already placed orders for importing 12 mt.
NTPC is likely to change its strategy by seeking long-term coal supply agreements instead of buying overseas mines, as envisaged in the company’s vision document, NTPC Corporate Plan 2032, drawn up by consulting firm Bain and Co. India Pvt. Ltd, Mint had reported on 14 March. Bain also advised NTPC to take small stakes in overseas mines to ensure supply security.
“We never said that if we get a very good opportunity, we will not buy a mine. It all depends upon the opportunity,” said another NTPC executive, requesting anonymity.
Questions emailed to an NTPC spokesperson on Thursday were not answered.
Ntpc dadri National Thermal Power Corporation Plant Dadri
Celio Nhachungue, deputy national director of the international relations directorate in Mozambique’s industry and trade ministry, said there was a lot of interest from Indian companies to enter his country’s mining sector.
“There are no more coal mines left to be acquired,” said Vicente Paulo C. Chihale, commercial counselor at Mozambique’s high commission in New Delhi. “Foreign companies can now participate in our mining sector through getting into joint ventures with the existing mine holders.”
Coal India Ltd has an 82% share of the country’s coal production, but has been unable to keep pace with rising demand. It is to supply NTPC with 145 mt in the current fiscal year.
A number of Indian firms have secured coal mines in Indonesia to fuel projects in India. But the financial viability of these mines is being affected because fuel costs are set to be higher than earlier estimated. Indonesia has stipulated that starting 23 September, the coal the country produces will be pegged at prevailing international prices.
NTPC was in the race this year to acquire the assets of Australian coal miner Bandanna Energy Ltd, but opted out as it found the price unviable.
It wants to exit ICVL, which was launched by five state-owned firms two years ago to buy coal mines overseas but hasn’t closed a single purchase yet.
Steel Authority of India Ltd and Coal India own 28% each in ICVL, while NTPC, Rashtriya Ispat Nigam Ltd and NMDC Ltd own 14% each.
“ICVL was never factored in our scheme of coal requirements,” said the first NTPC executive cited above.
“The issue of NTPC exiting ICVL is before us for deliberation,” said a senior power ministry official, requesting anonymity.
NTPC, which generates 8 megawatts (MW) of every 10MW it produces by burning coal, is looking to increase installed capacity from 34,854MW now to 75,000MW by 2017 and 128,000MW by 2032.
India has a known coal gross resource base of 264,000 mt, the fourth largest in the world, of which proven reserves are around 101,000 mt. Demand is around 600 mt per annum (mtpa) and is set to touch 2,340 mtpa by 2030.