Overseas companies evince interest in coal supply to NLC plants

NLC had in February invited expression of interest (EoIs) from overseas to acquire coal blocks abroad.

Last Updated: May 01, 2013, 12:33 PM IST

New Delhi: State-owned power generator Neyveli Lignite Corporation's efforts to secure coal supplies from abroad has received overwhelming response with at least 10 coal mining companies evincing interests to either offer stake or enter into long-term supply agreement for its thermal power plants.

"There is a shortage of coal in the country. So, we have to import coal. We have already invited EoI for acquiring coal mines abroad. Already ten people have responded. Further, we have kept it open-ended. We want to get more and more offers," NLC Chairman and Managing Director B Surender Mohan told reporters.

We have got offers from Indonesia, Mozambique and South Africa. Even there are applications from the US. They are willing to supply coal to us, he added.

Intending to secure its thermal coal requirement, NLC had in February invited expression of interest (EoIs) from overseas to acquire coal blocks abroad, enter into long-term supply agreement, form Joint venture with coal mining companies and to acquire equity stakes in coal mining companies.

In the EoI, NLC had stated that its coal requirement was expected to start from September 2013 with one million tonne per annum (mtpa) in the initial years to 10 mtpa when all the projects go on stream for captive use.

"NLC will keep the EoI open for some more time for interested parties to apply and once we get the offers, then in a month’s time, we will be evaluating them," Mohan said, adding that since a power plant generally has a life span of 25-30 years, NLC would like to acquire a mine having at least 250 -300 million tones of reserves.

NLC is developing various coal-fired projects. Work on the first phase of 2X500 MW at Tuticorin in Tamil Nadu is nearing completion and the unit is likely to be commissioned between September and December this year. It has also plans to set up three units of 660 MW each in Uttar Pradesh. There is also a proposal to set up three units of 660 MW each at Sirkazhi in Tamil Nadu.

The units in Tuticorin and Sirkazhi are based on imported coal. NLC has been seeking to secure supplies from overseas to fire these plants. It has applied for coal mines to the government for its proposed units in Uttar Pradesh.

Mohan said the company has Rs 2,500 crore reserves of cash and cash equivalents. The proposed acquisition, if it opts for that route for securing coal reserves, would be funded from cash reserves only.

However, he added that acquisition would not be done at one go. We have to do it in a slow manner. We will spend on the equity and that won’t take Rs 2,500 crore, he said.