Singareni, NTPC set to form 50:50 JV

State-owned Singareni Collieries Company Ltd (SCCL) and the National Thermal Power Corporation (NTPC) are setting up a 50:50 joint venture (JV) to undertake exploration, survey, extraction and consultancy services in coal mining and power generation.

A memorandum of understanding (MoU) to this effect will be signed on Wednesday.

SCCL and NTPC plan to combine their expertise and enter new areas of business. While SCCL is foraying into power generation, NTPC is entering coal mining.

Under the MoU, both the companies will form a joint business development group comprising three representatives from each side to formulate plans on projects for implementation.

The plans will then be sent for approval to the apex committee headed by the chairmen of both the corporations. The JV would raise funds for the projects on its own in 70:30 debt equity ratio, according to the officials.

NTPC is banking on the experience and expertise of SCCL in exploration and mining to realise its global plans. On the other hand, Singareni will enter power generation through this joint venture.

NTPC is also entering a similar arrangement with Coal India Ltd. NTPC, which has already been allotted eight coal blocks in the country, is also looking at overseas acquisition of coal mines and new coal blocks in Indonesia, South Africa, Nigeria, Australia and China.

Singareni Collieries expects exploration and extraction assignments in part of the eight coal blocks, which has estimated production capacity of 50 million tonne a year, through the joint venture. NTPC is expected to engage Coal India joint venture in at least two of these blocks, said sources.

"These blocks were allotted under different conditionalities. Some may require to follow global bidding process and some can be directly handed over to one of the two JVs for the development and mining," said an NTPC official. Singareni Collieries has also applied for the development of a coal block in Jharkhand.

SCCL is jointly owned by the Andhra Pradesh government and the Government of India with 51:49 equity participation.

Currently, SCCL operates 58 mines (47 underground and 11 opencast) in four districts in the state. It achieved 36.138 million tonne production of coal in 2005-06, registering a gross turnover of Rs 4,209 crore.