Indian private companies lose out on contracts in Africa as they look for picking up majority stakes in the projects which acts as a deterrent, say South Africa-based industry consultants.
"An Indian company would not consider an investment unless it can take up majority stake and that is where the talks fail," Keith Scott, Managing Director, MSA Group South Africa told PTI.
MSA Group is a specialist consultant to the mining industry.
"We advise Indian companies to come and invest in Africa by picking up minority stakes in the projects instead of majority. These companies can even sign offtake agreements because that is a more workable model than coming and seeking majority stake," Scott said but declined to name the companies.
When asked if this is a practice with the private or public sector firms, he said, "Mostly private firms because in case of state-run firms the governments are involved and it becomes a political issue."
"If your core requirement is taking coal in order to run your power business in India why would you want to take control of a money asset in Africa... You don't know how to run that business," Robert Appelbaum, Head of South Asia, Webber Wentzel said during an interaction.
Webber Wentzel, a South African legal firm is providing legal services to Indian companies such as Tata Power, Reliance Power, Jindal Steel & Power, JSW Steel etc.
"We tell them that even if you have minority stake in a company you have a voice in the company," Appelbaum said.
Indian power and steel companies are eyeing African countries like Mozambique, Botswana etc. As these countries have rich reserves of coal.
Country's largest thermal power generation firm NTPC is keen to acquire coal mines in South Africa and Mozambique. State-run Coal India has also shown interest in acquiring mines owned by the government of South Africa.
Tata Power which already has presence in the African region in the form of a joint venture -- Cennergi -- with Exxaro. It is actively pursuing opportunities to acquire land in strategic markets in the country.
Meanwhile, a lot of Indian companies are keen to explore the oil and gas sector in the African nations.
"We have seen huge interest in the oil and gas space in Africa from Indian firms like ONGC, Cairn India etc," Manus Booysen, Partner Webber Wentzel said.
He said that there is appetite for more business in Tanzania in East Africa and Botswana in Southern Africa.
He added that the companies are eyeing Mozambique and Tanzania mainly for liquefied natural gas.
