Anil Ambani's Reliance Power starts process to sell coal mines in Indonesia

Anil Ambani-promoted Reliance Power (RPower) has started the process to sell its coal mines in Indonesia and is expected to close the deal in few months, according to people in the know.  The deal, if completed, is expected to fetch the financially troubled group $150-200 million.

“The company has started the process and is in talks with potential buyers who may be interested in the mines for exports and domestic use,” said a person with direct knowledge of the development and did not wish to be identified.

A spokesperson for RPower declined to comment.

This is not the first time the company looks to divest from its Indonesian assets. In September 2015, media reports had quoted Anil Ambani, chairman of the company, as saying: “We have also decided to exit the coal business in Indonesia and we hope to complete transactions (in this regard) in the course of this year.”

The person quoted earlier added: “Indonesia-based and other foreign mining firms may be potential buyers for these mines.” 

RPower holds three coal concessions that are fully explored and are ready to produce coal. The total capacity for these mines includes 1.4 billion metric tonnes coal and 450 million metric tonnes of coal reserves. RPower was among those Indian power companies who aimed to secure coal supply from Indonesia as coal prices soared in 2010. However, with the crash in commodity prices in the following years, most of these acquisitions turned unviable for Indian power companies.

RPower reported a loss of Rs 3,558.51 crore for the March quarter, compared to a profit of Rs 189.21 crore reported in the same period a year ago. The loss was largely on account of an impairment taken on for its gas-based and solar assets. Reliance group as a whole is also facing one of its worst debt woes and asset sale will help ease the burden.