SPV planned for coal mines abroad

In an extension of the country's policy of securing its energy needs from overseas sources, the government is finalising a plan to set up a "special purpose vehicle" (SPV) to acquire coal mines abroad.

The entity will be set up jointly by five public sector companies "� the largest producers in their respective industries -power producer National Thermal Power Corporation (NTPC), steel-maker Steel Authority of India Ltd (SAIL), Rashtriya Ispat Nigam Ltd, Coal India Ltd and the National Mineral Development Corporation. Private participation may be considered.

The shareholding pattern will be in proportion to the coal requirements of each company.

The SPV is likely to be granted "navratna" status, which would entitle it to greater autonomy in decision-making. The proposal, which is being anchored by the steel ministry, has been broadly approved by the boards of the participating companies and will shortly be put up for the Cabinet's approval.

The SPV proposal comes even as Coal India's plan to set up an overseas subsidiary "�Coal Videsh "� is awaiting government approval.

The funding pattern and other details of the SPV are being worked out, but the company is expected to have sufficient paid-up equity capital to allow it to raise debt while retaining the option of further equity infusion in the future.

The coal hunt will mirror the ongoing global hunt for oil being conducted by ONGC Videsh Ltd , the overseas arm of ONGC, and other national oil companies.

Over Rs 20,000 crore has been spent across 14 countries, including Russia, Sudan and Nigeria, on oil and gas equity assets.