Will use coal from mines acquired inS Africa, Indonesia

Having bought two coal mines, one each in South Africa and Indonesia, the GMR Group is all set to establish new power plants on the east and west coasts of India.

The group is already scouting for suitable locations for setting up thermal power plants, which would use the coal from the newly acquired mines. GM Rao, chairman, GMR Group, said, "We are looking at locations on the east and west coasts, particularly in states like Gujarat and Maharashtra."

Rao said that the strategy behind the acquisitions of coal mines was to set up new power plants. The quantities of coal to be used and the capacities of the plants to be set up are being worked out. "Our strategy was different. Unlike others, we did not want to set up power plants first and then look for mines. We thought of securing the fuel first and then going ahead with the setting up of the plants," he said. Rao said the coal in the acquired mines is of high quality and can even support supercritical power plants, or those with higher generation capacity.

The group bought the South African coal mines of Canada-based Homeland Energy group by acquiring 33.5% equity in the company for about $30 million. GMR also acquired 100% of the Indonesia-based PT Barasentosa Lestari, which holds a 30-year mining authorisation licence for two coal blocks in Indonesia. "These acquisitions have resulted in savings of $140 million as the price at which we bought them is far lower than the prices at the time of our negotiations with the target companies," Rao said.

Though he did not elaborate on the plans for the coal extracted from these mines, group officials said the details of the new power projects are already being worked out.

According to an official, the group is already in talks with the Gujarat government for setting up a 2,000-mw plant at an estimated cost of Rs 10,000 crore. Funding details of this project were not immediately available. Group company GMR Infra, which has power as one of its three key verticals, has several projects of 4,000 mw in various stages of implementation. 

K V Ramana/ DNA-Daily News & Analysis Source: 3D Syndication