By SAURABH CHATURVEDI and RAKESH SHARMA NEW DELHI India is working on a policy that will allow state-run companies to acquire coal assets abroad faster, Coal Minister Sriprakash Jaiswal said Tuesday, as the country prepares to tackle competition from countries such as China to secure energy resources globally.
Energy-deficient India is trying to acquire coal mines abroad as local supplies aren't enough to feed the power plants the country is building. However, long processes to get government clearances often scuttle the efforts of state-run companies, which meet most of the local demand.
State-run Indian companies bought overseas coal assets worth just $22 million during 2009 and 2010, compared with $3.97 billion of purchases by their Chinese counterparts, according to Dealogic data. Private Indian companies acquired $1.06 billion worth of coal assets during the period.
"In the hindsight of our various acquisition bids, we realized that to fight competition from countries like China, we need to ensure speedy approvals," said Mr. Jaiswal. "Also, we need to rope in the Ministry of External Affairs to open diplomatic channels with the countries where we plan to acquire the mines."
Mr. Jaiswal said state-run companies have to seek approvals from several government agencies to buy assets overseas. They also can't aggressively bid as they fear the government's audit and investigative agencies may raise questions after the deals are signed, he added.
"The apprehensions lead to delays," he said. "We need various relaxations for our state-run companies and want to streamline the approval process."
Mr. Jaiswal said the coal ministry has given its approval to a draft note circulated by the Ministry of Heavy Industries and Public Enterprises on acquisitions of overseas assets. He didn't provide details of the draft note.
India doesn't have any specific policies to acquire energy resources aboard.
Also, unlike the Chinese state-run companies, Indian companies are relatively subservient to the government, industry lobby group Confederation of Indian Industry said in a December report. The boards of the energy companies are mostly dominated by government-appointed officials and they have limited autonomy in taking decisions on overseas investments, it said.
Meanwhile, Mr. Jaiswal will leave later Tuesday on an eight-day visit, mainly to seek coal mining assets in South Africa and Mozambique, and technology for converting coal into liquid fuel and gas.
The delegation comprising Coal India Ltd. Chairman P. S. Bhattacharyya and other officials will also visit the facilities of Sasol Ltd.'s, which makes liquid fuels from coal, in South Africa. "We will seek transfer of coal-to-liquid technology from Sasol," Mr. Jaiswal said.
The minister had earlier visited the U.S. and Australia, seeking coal assets there.
State-run Coal India, which accounts for about 81% of India's coal production, is scouting for mines in South Africa, Australia, the U.S. and Indonesia, Jaiswal said. "We will [also] ask the Mozambique government to allot more coal blocks to Coal India."
Coal India had acquired two coal mines in Mozambique last year. The company is the world's biggest producer of the commodity.
Coal India is in advanced talks with Peabody Energy Corp. to buy up to a 15% stake in the U.S.-based coal producer's Wilkie Creek mine in Australia, a person close to the development had said on Dec. 16.
It was also in discussions with Massey Energy Co. and Indonesia-based Novem/Sinarma to buy stakes in their mines, and with Drummond Company Inc. to buy its Columbian coal assets, the person had said.
Mr. Jaiswal said the government wants to increase local coal output as well. "India's coal production must grow at the rate of 10% over the next few years to meet growing demand," he said.
"The production growth falls short of our expectations on environmental issues," Mr. Jaiswal added, referring the government's cautious approach on clearing mining projects as they could destroy forests.
Mr. Jaiswal said he is talking to the environmental ministry to speed up clearances for coal projects.
Coal production grew 0.7% during the first seven months of the current financial year that started in April to 274.6 million metric tons, according to brokerage firm CLSA.
