Coal India may consider setting up power plants in the country to utilise excess coal

The world's largest coal producer Coal India Ltd (CIL) said it may consider setting up power plants in the country to utilise excess coal."We may set up power plants if stockpiles keep on rising. Currently, stockpiles stands at 53 mn tonnes," CIL Chairman P S Bhattacharyya told reporters on the sidelines of a coal summit.Coal India, which is going to launch its IPO in the second half of October, is already in pact with state-owned NTPC to set up two 2,000 MW power plants in Jharkhand.

"The inventory is rising mainly due to shortage of railway wagons," Bhattacharyya added. Coal India generally needs 205-210 wagons a day. But, the firm had previously said that on an average it was getting merely 170 wagons a day.

In the last fiscal, the 100 per cent government-owned firm produced 431.5 million tonnes of coal meeting the requirement of use industries like power. The Centre is diluting its 10 per cent stake in the upcoming IPO, which is expected to raise Rs 12,000-15,000 crore.To meet the rising coal requirement of power major NTPC, Coal India said it will soon come out with a tender to import the raw material for the power PSU.

"We will float the tender in next few months to import six million tonnes of coal for NTPC," Bhattacharyya added. The country's overall coal output during 2009-10 stood at about 532 million tonnes while consumption was over 600 million tonnes.

To meet the rising demand of coal, CIL is looking at forming joint ventures with global mining companies, taking equity in the mining projects and sourcing coal from such firms.

"Coal India has already shortlisted three global firms for a possible partnership," Bhattacharyya added.It is learnt that US-based firms Massey Energy and Peabody Energy, besides Indonesian Novem/Sinarma, have been shortlisted for a possible partnership either through JV or equity infusion.

Bhattacharyya also said that the company is investing in projects to wash coal to increase its calorific value. CIL plans to commission 20 washeries with a capacity to wash 111 million tonnes of fuel by 2015 at an investment of Rs 4,000 crore."Prices of washed coal will go up. Average price of our coal is $20 a tonne. Washing would escalate its cost to USD 26-27 a tonne," he said. Prices of international coal, with higher calorific value, starts from $45 a tonne.