Reliance Power acquiring coal mine in Indonesia

Business Daily from THE HINDU group of publications
Friday, May 02, 2008

Coal supplies for mega projects in AP, Maharashtra

Rahul Wadke

Mumbai, May 1 Reliance Power Ltd, the recently listed power generation company of the Anil Ambani group, would be investing about $1 billion (Rs 4,000 crore) in acquiring and developing a coal mine in the South Sumatra province of Indonesia.

The sub-bituminous coal would be supplied to the company’s 4,000-MW Ultra Mega Power Project at Krishnapatnam in Andhra Pradesh, which would be on stream by 2013. Coal would also be supplied to the 4,000-MW Shahapur power project in Maharashtra, which has a thermal power component of 1,200 MW.

The mine has enough spare capacity to supply to an additional mega coastal power project.

Sub-bituminous is a type of coal whose properties range from lignite to bituminous coal. It is primarily used as fuel for steam-electric power generation.

Talking to Business Line, Mr J.P. Chalasani, CEO of the company, said that $600 million would be invested in the mine acquisition and another $400 million would be spent in setting up the 100-km railway line for transporting coal and setting up a captive jetty, he said.

Mr Chalasani said that mine has coal resources of about 2 billion tonnes. The exploitable reserves are about 1.2 billion tonnes. The mining rights are currently with a local company and have received all the regulatory clearances. There are no court cases pending against the mine. The mine will start producing coal by 2012-13, he said.

“There would be no upfront payment for acquisition. Payment is linked to the coal production and money would be paid on tonnage. Therefore, our Indonesian counterpart has additional incentive in developing the mine faster,” Mr Chalasani said.

Reliance Power is the second large domestic power company to acquire coal mines in Indonesia. In March 2007, Tata Power had invested $1.1 billion to purchase 30 per cent equity stake in two major Indonesian thermal coal producers, PT Kaltim Prima Coal and PT Arutmin Indonesia and a related trading company owned by PT Bumi Resources Tbk.
Up coming projects

Reliance Power is developing 13 projects of which three projects are likely to come up by 2010. The Rosa-I of 600 MW would be on stream by 2009 and Rosa-II of 600 MW by 2010. The Butibori captive power of 300 MW will come up in 18 months, a company official said.

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