New Delhi - Coal India, the world's
biggest coal miner, moved ahead on Wednesday with plans to acquire
mines abroad by beginning the process of forming a subsidiary in
The development follows state-run Coal
India Ltd (CIL) signing a pact with the Limpopo province of South
Africa to identify and develop coal mines as the Indian company
grapples with an acute coal shortage.
The public sector firm invited bids for
appointing consultants to help it form a wholly-owned subsidiary in
Africa, the semi-official news agency Press Trust of India said.
"Coal India intends to select
South Africa based consultant(s) to assist its venture of formation
of a wholly-owned subsidiary company," CIL said in the bids
document, according to the news agency.
The step comes as India recovers from
last week's massive power outage, the worst in the history of the
country, which runs a peak-hour electricity shortfall of around 12%.
Last year, the government of Limpopo,
the northern province of South Africa, approached Coal India to set
up a joint venture.
Coal India has earmarked 60bn rupees
($1.1bn) for acquisition of mines overseas in this financial year
from its cash reserves of nearly $11bn.
CIL, which accounts for more than 80%
of domestic coal production, missed its revised 2011-12 production
target. It achieved only 435.84 metric tonnes as against the targeted
447 metric tonnes.
The demand-supply gap for coal was
161.5 million tonnes in the last fiscal year to March 2012 and it is
expected to be around 114 million tonnes this year.
CIL has agreed to a government demand
that it sign fuel supply agreements to meet a minimum of 80 percent
of the needs of some 48 new power projects.
The company will have to pay penalties
to electric utilities in the event of a shortfall in supply.
It wants to improve coal availability
both by increasing domestic production and also through overseas
Coal India produces more than 80% of
India's coal at close to 500 mines across eight states.
It holds the largest extractable coal
reserves in the world, with over 22 billion tonnes, but has struggled
to boost output due to failure to get environment and regulatory
Coal accounts for more than half of
India's energy use and consumption is set to increase as development
accelerates in energy-intensive sectors such as steel and cement
India has been adding power station
capacity to meet its needs, but some plants are idle because of fuel
The government sold off a 10% stake in
Kolkata-based Coal India in 2010, raking in $3.4bn.
*Follow Fin24 on Twitter, Facebook and