September 08, 2008

REL to meet its coal demand through acquisitions in Indonesia

It is reported that Reliance Energy Limited has finalized its coal supply strategy for its upcoming power plants and mapped out a comprehensive plan which includes acquisition of some mid sized coal companies.

As per report, REL has short listed 8 companies in Indonesia for this plan. The acquisition targets include EnerCorp and Beraucoal which are on the block. While it is looking at an assured supply off take with PT Adaro, the other short listed companies include PT Tekno Orbit Persada, PT TransPacific, PT Barasentosa, PT Batudara and PT Indoprivate coal. The deals are likely to be firmed up within the next few months.

The report cited a source close to the development as saying that “The idea is to acquire a company which has Greenfield discovered coal blocks that could come into production in another four years. This would be in line with its plans to develop the power plants that are expected to go into production by 2010-11. Also, buying into some of the existing coal producing companies would ensure coal supplies which can be traded till the time Reliance is ready to begin consumption.”

Reliance Energy is currently working on 2 power projects in Krishnapatnam ultra mega power project and the thermal power project at Shahpur for which imported coal would be used.