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Phalguna Jandhyala

New Delhi, July 16 A special purpose vehicle (SPV) promoted by five public sector undertakings to scout and acquire coal properties abroad is likely to take shape soon with the Steel Ministry planning to put the proposal before the Cabinet by the end of this month.

The acquisitions are to be undertaken to ensure coal supplies for the steel and power sectors.

“Currently, we are in the process of consultations with various departments on the matter and it is expected to be over in the next couple of weeks.

“By the end of the month we expect it to be placed before the Cabinet,” a senior official in the Steel Ministry told Business Line.

The five public sector units (PSUs) that would initially participate in the SPV are Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd (RINL), National Mineral Development Corporation (NMDC), NTPC Ltd and Coal India Ltd (CIL).

“The SPV does not call for budgetary support and the understanding among all the companies is that a portion of their profits would be made available for the SPV, the Ministry does not see a problem for getting the necessary Cabinet clearance,” the official said.

The shareholding pattern of the new company would be in proportion to the coal requirement of the individual company.

The proposed SPV can acquire a stake in a company abroad or look at taking the prospecting root for getting the coal mines abroad.

“The SPV would have an authorised capital of Rs 10,000 crore and a paid-up equity of Rs 3,500 crore. While SAIL and CIL would have to chip in with Rs 1,000 crore each, the other three companies would have to contribute Rs 500 crore,” the official said. “Currently, SAIL imports around 70 per cent of its coal requirement, while RINL imports around 90 per cent.

“And both these companies are going in for major expansions and their import requirements will go up.

“So, this SPV will help them overcome the shortfall as, according to estimates, the SPV is looking at 500 million tonnes of recoverable reserves and also thermal coal,” he added.

More Stories on : Coal | Overseas Investments

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