INDIA BUSINESS WORLD - APRIL 2007
The Month that was ...

TATA POWER BUYS 30% IN 3 INDONESIAN COAL FIRMS

After months of long negotiations, India's largest private power utility Tata Power Company (TPC) pipped Japanese Mitsubishi and Korea Electric Power Corp (Kepco) to buy 30% stake in three Indonesian thermal coal companies for $1.1 bn in cash.

On Saturday, TPC said that it signed definitive agreements to purchase 30% equity stakes in two major Indonesian thermal coal producers - PT Kaltim Prima Coal (KPC) and PT Arutmin Indonesia (Arutmin), and a related trading company owned by PT Bumi Resources Tbk (Bumi).

As part of the purchase, Tata Power has also signed a coal off take agreement with KPC which entitles it to purchase about 10 million tonnes of coal per annum starting from 2011. The Anil Ambani owned Reliance Energy (REL) was among the half-a-dozen companies in the race for the put on block by the Indonesian promoters. The funds would help the Indonesian companies turn completely debt-free.

The deal has given Tata Power access to one of the largest exporting thermal coal mines in the world. It not only secures Tata Power's fuel requirements but also opens up opportunities for the company to own and operate a range of competitive and profitable electricity and energy businesses in India and overseas.

Over the next five years, Tata Power is setting up at least three power projects on the west coast with a cumulative capacity of 7,000 mega watt (MW), including the 4,000 MW Mundra ultra mega power project.