Badal Sanyal

Kolkata, March 30

COAL India Ltd (CIL) has decided to enter into the power generation business jointly with Neyveli Lignite Corporation (NLC). To begin with, a 2,000-MW capacity thermal power plant is to be set up at the pithead of one of the mines located in the command area of Mahanadi Coalfields Ltd in Orissa.

Confirming the development, the Coal India Chairman, Mr Shashi Kumar, said here that although it would be a new line of business for CIL, the company would gain in the long run by associating itself with the project as a promoter. Once the project is completed, the CIL-NLC combine might set up large thermal power projects in other States also.

Incidentally, Mr Kumar was appointed Chairman of CIL with effect from March 30 thereby ending all speculation at Coal Bhavan over the successor of the last full-time Chairman, Mr N.K. Sharma, who was suspended 16 months ago and subsequently removed from the post.

Mr Kumar, Director (Marketing) of the company, was asked to take over as acting Chairman during the last 16 months amid uncertainty and confusion because he had to act as Chairman for almost a year when his predecessor officially remained as Chairman but was under suspension.

Later, Mr Sharma was removed from the post, paving the way for selection of a successor.

Mr Kumar told Business Line that he preferred to forget his "stressful" 16 months although he was personally happy about the company's all-round performance, which is poised to end the 2004-05 fiscal with a turnover of over Rs 31,000 crore, gross profit of over Rs 7,000 crore and a production of about 323 million tonnes against the target of 214 mt.

Mr Kumar said that the company had plans to add value to its coal by diversifying operations. All its seven production subsidiaries would give priority to produce more of washed and proper sized coal, which would facilitate them to get better sales returns.

He said domestic coal companies were aware that they were at present operating in a sellers' market. Therefore, it would be easier for them to revise prices even if they had to protect inefficiencies. But Mr Kumar was against revising prices without improving quality and the actual heat value of coal.

This apart, Coal India is planning to enter coal gasification and coal-bed methane projects jointly with ONGC. A memorandum of understanding would shortly be signed with ONGC for setting up a joint venture company for setting up a coal gasification project.

(This article was published in the Business Line print edition dated March 31, 2005)
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