Govt plans to further back Coal India spending
07 May 2012
The union government is planning to set up a wealth fund to help Coal India Ltd acquire assets abroad, coal minister Sriprakash Jaiswal said. The creation of such a fund would provide government financial backing to CIL in its efforts to increase production.
Jaiswal said though Coal India Ltd (CIL) has surplus resources of about Rs6,000 crore for overseas acquisitions, it must also have financial support from the government for acquiring large assets abroad.
"To address the problem, the government is proposing to create a fund on the line of sovereign wealth fund created in some countries," he told reporters at a conference organised by the Chambers of Indian Commerce & Industry.
The government recently issued an unprecedented Presidential decree to CIL saying it must sign agreements with electricity producers to meet at least 80 per cent of their fuel requirements, importing the coal if necessary (See: Coal India ordered to sign FSAs with power companies)
The world's largest coal producer, state-owned CIL controls 80 per cent of India's 'black diamond' market. However, its production has always been short of requirements; and this has come into further focus as India pursues its growth dream. Without fuel for power, the dream could come to a rude end.
CIL is actively seeking coal assets in Australia, South Africa, Mozambique, the USA and Indonesia for acquiring coal mines abroad, according to the minister.