Singareni, APGenco all set for mining, power joint ventures

Coal blocks being identified for joint operations

Singareni Collieries Company Limited (SCCL) and Andhra Pradesh Power Generation Corporation (APGenco) are all set to ink joint venture pacts, both for mining and power generation.

A committee "� set up by the two public sector entities "� is now in the process of identifying the coal blocks, which are yet to be explored, for joint operations.

In its preliminary meeting held on Monday, the committee discussed the options of forming a joint venture or floating a special purpose vehicle for both the mining and power generation operations.

A final decision on this is expected by October end, officials said. The committee is also considering roping in equipment suppliers into the new venture.

"One of the proposals is that SCCL and the equipment suppliers will have equal participation of 30 per cent equity while the remaining 40 per cent will be with APGenco in the new entity," a senior APGenco official told Business Standard.

The officials said that the investment required and the mode of raising the money for the joint projects would be determined after the identification of the coal blocks. With regard to the new power plants, the investment would be about Rs 4.2 crore per mega watt, according to APGenco officials.

The idea of entering into the joint development of mines and power plants emerged after APGenco announced its huge expansion plans. The power generation company announced an ambitious plan of doubling its generation capacity from the existing 6,000 mw to around 12,000 mw in the next 3-4 year period.

Besides the ongoing expansion plans of RTPP (420 mw) and VTPS (660 mw), APGenco proposed to take up another 2,500 mw capacity addition in thermal generation. For this, APGenco needs an additional quantity of about 7 million tonnes of coal. The existing production capacity of SCCL cannot even partly satisfy this additional requirement.

Besides, SCCL too has a reason to enter into a joint arrangement for additional coal production, as it was not in a position to take up operations in several new blocks on its own.

"As most of the coal blocks are unviable due to the terrain and other factors, we are apprehensive on getting the Planning Commission's approval for taking up these blocks. In these circumstances, both of us have to arrive at an arrangement that can make the exploration of new blocks a viable proposition," a senior SCCL official told Business Standard.

Earlier, SCCL had approached the National Thermal Power Corporation (NTPC) for a similar mining joint venture in one of these blocks but NTPC has not shown much interest.

"The proposal is still being considered at the top level. Around Rs 400 crore investment is needed to develop one block as it needs deep shaft mining," an NTPC official said.

Meanwhile, the Centre cleared two new coal blocks at Sattupally in Khammam district. The opencast mining, which is expected to begin from October 2005 in Sattupally, will have a production capacity of one million tonnes per year.