Indonesia offers sops to ADAG for coal mining

Indonesia will provide fiscal incentives and support in land acquisition for Anil Dhirubhai Ambani group's $4.5-billion investment in coal mines and related infrastructure that will deliver 50 million tonnes of coal a year.

Indonesian President Susilo Bambang Yudhoyono, currently on a three-day state visit to India , is scheduled to meet Anil Ambani on Tuesday to lend his support for the biggest FDI proposal in southeast Asia's largest economy, people involved in the development said.

The company will sign MoUs with provincial authorities of Indonesia to facilitate the projects that also include a 2,000 MW power plant. The agreements would speed up various approvals and acquisition of land for the 200-km railway line and port that will help ship coal for Reliance Power's Krishnapatnam ultra mega power project in Andhra Pradesh. Industry sources said that at current prices, coal costs would be a third less than imported fuel.

With reserves of 2 billion tonnes of coal, the mines in Sumatra will initially start producing at the rate of 7-8 million tonnes a year and in another year and a half, annual output would rise to 25 million tonnes. The project, along with the power plant involves an investment of $3.5 billion. Another project at Jambi will deliver an equivalent amount of coal but the planned investment is lower as the project does not include a power station. The output from the projects can help generate 12,000 MW of power.

Considering the importance of the project to the local economy, the provincial governments of Indonesia have are supporting the projects and will sing MoUs to support the investment. The MoUs would provide for long-term fiscal incentives, a single-window mechanism for all issues in the implementation of the project, facilitating various fiscal incentives and tax exemptions to the project, and help in issuance of all statutory clearances, permits, licences, including environment licenses and forestry permits necessary for the project.

Reliance Power is a leading private sector power generation company. It is implementing power projects with aggregate capacity of over 37,000 MW and has large captive coal reserves.