Business Daily from THE HINDU group of publications
Wednesday, Aug 23, 2006
Alliances & Joint Ventures
Industry & Economy - Coal
Singareni Collieries, NTPC to form joint venture
Joint venture benefits
The MoU is aimed at producing better economies of scale in power generation and coal mining leveraging joint capabilities.
The joint venture will allow SCCL to take up more coal mining projects and NTPC to use coal from mines developed together.
Hyderabad , Aug. 22
The State-owned Singareni Collieries Company Ltd (SCCL) and NTPC Ltd are set to sign a joint venture agreement to promote one or more companies to take up coal mining and coal-based power projects.
A memorandum of understanding will be signed between the CMD of SCCL, Mr R.H. Khawaja, and the CMD of NTPC, Mr T. Sankaralingam, in the presence of the Andhra Pradesh Chief Minister, Dr Y.S. Rajasekhara Reddy on Wednesday.
The MoU is aimed at synergising the business operations between two large undertakings that could potentially mean better economies of scale in power generation and coal mining leveraging joint capabilities.
As per the terms of the MoU, NTPC & SCCL will have equal equity holding in the joint ventures they plan to create with a debt and equity ratio of 70:30 respectively. The MoU will be valid for five years initially according to a statement from the Chief Minister's Office.
In line with the Government policy for "Power for all by 2012," NTPC has drawn an ambitious programme for capacity addition to become a 66,000 MW Company by 2017. Major portion of this capacity addition would be coal based.
With coal seen as amongst the most affordable, safe and reliable energy resource, this is seen as fuelling future growth in the power sector.
With expertise on mining and extraction drawn from about 120 years of existence, SCCL produces nine per cent of the country's coal production with about seven per cent reserves. It produced 36.13 million tonnes of coal in the year 2005-06, (the highest ever in its history). SCCL plans to execute about 25 new projects during XI and XII Plans.
On the other hand, NTPC acquired eight captive coal blocks envisaged producing 50 million tonnes per annum to meet its own requirements. NTPC is initiating steps for developing these coal blocks.
The MoU will pave way for the acquisition of coal/lignite mining blocks, exploration and development. Both the companies will create a joint business development group.
While SCCL will find this move beneficial to its growth plans by taking up more coal mining projects, NTPC, which is looking at additional reserves to meet its own requirements, would be able to use coal from mines developed together.
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