October 16, 2008

Reliance Energy scouting for overseas coal assets

It is reported that Reliance Energy is planning to increase its capacity to 20,000 MW over the next five years and is thereby scouting for coalmines abroad. As per report Reliance Energy, eyeing stakes in Australian, Indonesian and African coal mines, is also evaluating options to sign long term contracts with coal miners.

Mr Jayarama Chalasani director for business development of Reliance Energy told Reuters that it is looking to acquire mines in Indonesia, Australia and Africa at competitive rates and was open to signing long term contracts. He added that "If you have to set up a coastal power plant, the landed cost of imported coal is cheaper than local coal."

Mr Chalasani said the company plans to raise between INR 480 billion rupees (USD 11.8 billion) and INR 500 billion in debt over the next seven to eight years to expand generation capacity nearly 16 times to 15,000 megawatts. He added that "It is not the money, but the fuel, which is a constraint for stepping up capacity across the country."

The strategy behind acquiring mines is to ensure regular supply of coal and the company is therefore targeting coalmines with high calorific value to maximize investment returns.