Coal India and NTPC to Form Joint Venture for 4,000-Megawatt Power Plant in Jharkhand

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Researched by Industrial Info Resources (Sugar Land, Texas)--Coal India Limited (CIL) (Kolkata, West Bengal), a public sector undertaking and one of the largest coal mining companies in the world, and NTPC Limited (BSE:532555) (New Delhi), one of India's largest power producing and utility companies, are expected to sign an agreement next month to build a 4,000-megawatt (MW) pithead coal-fired thermal power plant in Brahmani, Jharkhand. The project is estimated to require a capital outlay of $4.6 billion. CIL plans to foray into mainstream power production through this 50:50 joint venture.

According to CIL's Technical Director M.C. Jha, the Brahmani coal block, near the Rajmahal coal mine, has estimated reserves of 1,100 million tons of mainly E and F grades of coal. The poor-quality coal, often used in power plants in India, has a very low calorific value and high ash content. A detailed exploration of the mine is in progress. The state-owned mining company plans to build open-cast mines in the region with a total annual capacity of at least 15 million tons of coal. Development of the mine is estimated to cost $320 million. CIL's board is expected to review and approve the project next month, after which an agreement will be signed with NTPC. The mined coal will primarily cater to the needs of the planned 4,000-MW power plant with a possibility of excess coal being supplied to other plants operated by NTPC across the country.

The proposed power plant is part of NTPC's plans to augment its power generation capacity. The company currently has a total installed power generation capacity of 30,144 MW and plans to boost its capacity by about 19,000 MW over the next three years. The firm is targeting a total power generation capacity of 50,000 MW by 2012. In order to achieve this, the firm requires an assured supply of coal for its existing and upcoming thermal power plants. Last week, NTPC signed a 20-year fuel supply agreement with CIL to ensure a steady and reliable supply of coal for its fuel-starved thermal power plants in India. The company is estimated to require about 150 million tons of coal this fiscal year, of which 114.7 million tons will be supplied by CIL and nearly 17 million tons will be procured from the Singareni coal mines in Andhra Pradesh. NTPC will import the remaining requirement of coal.

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