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Cash-rich Coal India (CIL) is unlikely to be affected by the World Bank's decision to limit investment. The miner has been funding projects from internal accruals and is confident of doing so in the future.
In the late 1990s, the World Bank had announced it would lend $1.03 billion to Coal India along with a Japanese lending agency. However, it recently said it would not fund the sector, as companies "have pushed back efforts to fight climate change by arguing fossil fuels are a cure to 'energy poverty', which is holding back developing countries".
"When it came to lifting countries out of poverty, coal was part of the problem - and not part of a broader solution," Rachel Kyte, World Bank's climate change envoy, was quoted saying at an event in Washington last week.
CIL, which accounts for 80 per cent of India's coal production, sees nothing to worry citing healthy finances. It took a $484.4-million loan from the World Bank and Japan Bank for International Cooperation (now part of Japan International Cooperation Agency) over a span of five years starting 1998, which has already been repaid.
"Of the $1.03-billion promised, CIL took only half of it. That, too, has been repaid more than a decade ago. CIL has been successfully funding its projects since then and there is no reason it would find any difficulty in doing so," said a senior CIL official.
Due to the lack of major capex in the past, CIL has been able to accumulate cash. After accounting for this outflow and annual cash generation, it still has cash reserve of Rs 50,000 crore. While it had been investing Rs 1,200-1,500 crore annually towards capex even a couple of years ago, CIL this year has set the capex target of Rs 5,000 crore. Besides, it would be investing another Rs 6,000 crore on augmenting other infrastructure, including rail connectivity.
Apart from ongoing coal projects, rail projects such as the 44-km Tori-Shivpur and 53-km Shivpur-Kathautia railway line in North Karanpura in Jharkhand; the 53-km Jharsuguda-Barpalli-Sardega railway line in Ib Valley in Odisha, and the 180-km Bhupdevpur-Korichapan-Dharamjaigarh line in Mand-Raigarh coalfield in Chhattisgarh are also being funded by internal accruals.
