TAT Power is in talks to pick about 15% stake in MEC Coal, the Dubai registered company that owns more than two billion tonnes of coal reserves in Indonesia.

A person familiar with the development said that the TATA Group subsidiary, which the source said is negotiating with MEC co promoter Ras-al-Khaimah Investment Authority, is keen on augmenting its foreign coal assets to reduce power generation costs at its plants in India, where fuel shortage often leads to outages.

The source added that "Negotiations are in early stages and may or may not result in a transaction. But Rasal-Khaimah has been keen on having an Indian partner in the coal mining project.” It is, however, unclear whether Ras-al-Khaima has approached other Indian companies too.

MEC Coal is developing coal concessions in Indonesia, along with an integrated heavyhaul rail transportation system and ship loading jetty in the East Kalimantan province. The coal railway project is estimated to cost about USD 1 billion.

The source said the a deal would include a provision for an offtake arrangement. If the deal goes through, it will be the second time the TATAs will be buying stake in Indonesian coalmines.

(Sourced from www.businessreviewindia.in)