Coal imports sought to be upped for coastal companies

Coastal Energy Pvt Ltd (CEPL), India's second largest coal importer, has signed a memorandum of understanding for supply of coal to major power companies along the Indian coastline. This is likely to take its annual imports to 16 million tonnes from the current 6 million tonnes.

CEPL, which expects to close the year with a revenue of Rs 1,800 crore, is part of the Dubai-based Coal and Oil Group.

Close to 15,000 Mw of power is expected to be generated by the power plants located in coastal areas. These plants, which are primarily dependent on coal, are expected to generate a demand of around 45 million tonnes a year over the next three to five years. The current imports stand at around 20 million tonnes.

The company has signed agreements with state utilities like Tata Power, Maharashtra State Electricity Board and other state electricity boards.

The Coal and Oil Group (COG) was planning to acquire mines and mining assets in Indonesia, COG President and Chief Executive Officer Ahmed Buhari said.

"With power companies' increasing dependence on coal, fuel security has assumed paramount importance. The need, therefore, arises for importers like us to hedge through equity mining and long-term agreement supplies. In some cases, we pre-finance mines in return for coal. With investment banks entering the sector, we would work with investment banks like Morgan Stanley and Merrill Lynch, which would support us with supplies from their own sources globally," Buhari said.

The need for coal imports is on the rise. Other than the power sector, which accounts for 60 per cent of coal imports into India, and the cement industry, the steel industry is emerging as a strong business potential. "Even our stock and sale retail operation is booming," Buhari said.