Coal India Ltd. (CIL) has been directed by its board to withdraw from the five-way joint venture — International Coal Ventures Ltd — formed in May 2009 for overseas acquisition of coal assets.
Available information suggested that matters would be taken forward after discussions with Coal Minister Piyush Goyal.
While CIL and the Steel Authority of India (SAIL) were the major partners with 28 per cent stake each, Rashtriya Ispat Nigam, NMDC and NTPC were also partners in ICVL, holding 14 per cent each. The chairmen of CIL and SAIL remained tight-lipped on the issue.
CIL said in a stock exchange filing that its board at its meeting last week had directed that it withdraw from ICVL.
It may be mentioned that although ICVL was unable to make any headway since its formation, it tasted success, and in May, 2012, too the CIL board had favoured a withdrawal from ICVL, saying that the special purpose vehicle had failed to make headway.
However, things changed with ICVL’s acquisition in July, 2014, of the operating coal mines and assets of Rio Tinto in Mozambique. The reserves of this mine containing coking and thermal coal were estimated at 2.6 billion tonnes.
Although ICVL was formed with an initial paid-up equity of Rs.3,500 crore to secure coal assets, often the constituent companies felt that there was a conflict of interest as the thrust by the two steel companies as well as NMDC was on securing coking coal assets. This was of no interest to NTPC and of little interest to CIL. NTPC too had once expressed its desire to opt out of the partnership.
Aside from the conflict of interest, the decision–making at ICVL was too slow it was felt, when in the international arena, one had to move fast with quick-decision making.
In this case, each proposal had to go to the committee of secretaries for vetting, leading to delays. All that changed with Mozambique buy and sector experts found it queer that CIL was keen on opting out at this juncture.
Published - February 24, 2015 03:31 pm IST
