INDIA BUSINESS WORLD - JANUARY 1^st - JANUARY 15^th - 2008

COAL INDIA (CIL) CHHATTISGARH TO FLOAT POWER JOINT VENTURE

COAL India (CIL) has decided to float a joint venture power generation company with the Chhattisgarh State Electricity Board (CSEB) to set up a 1000-mw plant at an investment of Rs 4,000 crore in the state.

"We will set up the plant through CIL's subsidiary, South Eastern Coalfields (SECL). It will be a pithead station. We are in talks with CSEB for deciding on the holding pattern for the proposed company," CIL chairman, P S Bhattacharyya said.

"CSEB would like SECL to take a majority stake. But talks are yet to be concluded. Nevertheless, we have decided to set up the plant near one of SECL's existing mines or blocks with adequate reserves of coal," he said. The project will have a 70:30 debt-equity ratio wherein SECL and CSEB will chip in with Rs 1,200-crore project equity component, while the balance Rs 2,800 will be in the form of debt.

Interestingly, CIL has decided to float a joint venture Special Purpose Vehicle (SPV) with NTPC to build two power plants of 1500 mw. Additionally, they also develop two coal mines in Jharkhand. The total cost has been estimated at Rs 8,000 crore. Both CIL and NTPC will hold 50:50 in the SPV and the power produced from these plants would be sold commercially - mainly through Power Purchase Agreements (PPAs).

The coal giant and the power major have been allocated two coal mines - Brahmini and Chichro Patrimal - which have aggregate coal reserves of 2000 million tonne.