Coal companies with huge mining capacity find power generation a more profitable proposition rather than selling coal to financially weak SEBs, Also, inadequate logistics facilities are posing problems for dispatching coal to long-distance power stations.

Badal Sanyal

Kolkata, May 15

THE stage is now ready for Mahanadi Coalfields Ltd (MCL) and Neyveli Lignite Corporation (NLC) to sign an MoU for undertaking a joint venture power project in Orissa.

Informal discussions between the two PSUs over the possibility of setting up a 2,000 MW thermal power plant are reportedly concluded to pave the way for setting up a joint venture company.

The Ranchi-based Central Mine Planning & Design Institute (CMPDI), a subsidiary of Coal India Ltd, has prepared a detailed project report facilitating the two PSUs to set up their maiden joint venture.

For CIL, this will be the forward integration of its coal mining activities. In the case of NLC, this will be its first coal-based power project.

Encouraged by MCL's move to diversify its business into power generation, South Eastern Coalfields Ltd (SECL), another profit-making subsidiary of CIL is also considering entering the power generation business. SECL has decided to engage CMPDI to examine the techno-economic feasibility of a joint venture in its mining area.

The plans of Northern Coalfields Ltd (NCL) are similar to those of MCL and SECL as this subsidiary of CIL has adequate resources to take up power generation activity.

A senior level CIL source said coal companies with huge mining capacity found power generation a profitable proposition rather than selling coal to financially weak State electricity boards.

Moreover, inadequate logistics facilities are posing problems for dispatching coal to long-distance power stations.

The source said that MCL's joint venture power project was going to be model project for other subsidiaries of CIL.

The success of the project may have far reaching impact on domestic thermal power generation business.

(This article was published in the Business Line print edition dated May 16, 2005)
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