Government Considering Sovereign Fund for Overseas Coal Acquisition
The Government is proposing to create a fund on the line of Sovereign Wealth Fund created in some countries for Overseas Coal acquisition. Though CIL has surplus resources for investing outside, it is important to have financial support from the Government for acquiring very large assets abroad and bilateral understanding between the two countries. This was stated by Minister of Coal, Shri Sripraksh Jaisawal addressing a round table conference organised by Confederation of Indian Industry on the issues regarding Overseas Coal Acquisition here today. He said that acquisition of coal properties abroad has assumed large significance in recent times in view of the domestic production constraints and the growing demand for coal by different consuming sectors particularly, Steel & Power. It is an important issue in the present circumstances as the country is unable to meet its Energy requirements, with the resources available domestically.
Underlining the importance of energy in development, Shri Jaisawal said that energy is the most critical input for economic development and improvement in quality of life. “We are facing tough challenges in meeting the energy needs of the country. The nation’s energy requirements are envisaged to increase to about 1667-2077 million tonnes by 2031-32 as per the projections made in Integrated Energy Policy Committee Report. The overall import dependence of energy in 2031-32 is projected to be in the range of 58-67%. This kind of growth in energy demand and the increasing gap between domestic supply and demand, will make it imperative to secure energy supplies through imports” , he added.
The Minister said that energy security is an important area and strategies need to be worked out for ensuring uninterrupted supplies of energy for achieving the projected growth in economy. From energy security point of view, Government of India has been encouraging both public and private sector companies to acquire energy assets abroad. There have been successful stories in both oil and coal acquisitions. However, we need to be more aggressive in acquiring energy assets abroad.
Highlighting the steps taken by CIL to secure the energy needs of the country, Shri jaisawal said that Coal India Limited (CIL) has taken an initiative to acquire coal properties abroad. CIL is pursuing its foreign venture initiatives through Coal Videsh Division functioning at CIL Headquarters, Kolkata. Australia, South Africa, Mozambique, USA and Indonesia have been prioritized by CIL for acquiring mining assets based on combination of factors like availability of good quality coal resources, infrastructure, favorable policy of FDI for coal mining etc. Coal India Limited has been awarded two blocks in Mozambique having over 1 billion tonnes coal reserves and action has been initiated for development and exploration of these blocks. Further, CIL had floated a global Expression of Interest to select strategic partners in Australia, USA, South Africa and Indonesia. In addition to the efforts through Coal Videsh department, CIL is also pursuing acquisition of coal properties through a Special Purpose Vehicle (SPV) “International Coal Ventures Private Limited” (ICVL), a consortium of different public sector companies.
Coal Minister said that there are issues which need to be resolved urgently in regard to acquisitions abroad especially in view of the fact that other energy deficit countries are rapidly buying assets abroad. The decision-making process needs to be fast tracked and a policy support framework needs to be established to overcome risk aversion. In a number of cases the Greenfield assets/projects are devoid of basic infrastructure and the developers are expected to develop the infrastructural facilities as well particularly for coal evacuation and port development. Development of mining assets and the infrastructure is highly capital intensive and it would be preferable if a group of companies working in the area come together for addressing the issue, he added.