Thaindian News

New Delhi, May 4 (IANS) Realising that India needs to be more aggressive in acquiring coal assets overseas to boost energy security, the government is considering setting up a sovereign fund to secure supplies to meet the growing demand mostly from power and steel producers, Coal Minister Sriprakash Jaiswal said Friday.

He said coal assets in Australia, South Africa, Mozambique, US and Indonesia are on the priority list for acquisitions by state-run Coal India Limited (CIL).

India has emerged the third largest consumer of coal in the world. However, domestic production has failed to keep pace with the increase in demand. With the demand-supply deficit is estimated to grow 17.2 percent annually till 2017, acquisition of overseas coal mines has emerged as a key strategy to augment coal supplies and mitigate stagnating domestic production.

He said the country’s energy requirements projected to increase to about 1,667-2,077 million tonnes by 2031-32 from 700 million tonnes in 2011-12. More importantly, overall import dependence is likely to vary between 58 and 67 per cent by that time.

“Acquisition of coal assets has assumed significance due to the domestic production constraints. Coal India has taken several initiatives in this space and has prioritised countries including Australia, Mozambique, South Africa, Indonesia and the US for acquiring mining assets,” Jaiswal said at a conference organised by the Confederation of Indian Industry (CII) on overseas coal acquisition.

The minister also called for a policy support framework to overcome risk aversion. “The company boards of PSU companies also need to be proactive in matters related to overseas acquisitions.”

India holds around 10 percent of the world’s coal reserves, but domestic supply has failed to meet the demand due to regulatory hurdles, forcing imports of about 100 million tonnes annually.

Jaiswal said the proposed coal regulatory Bill was likely to come before the cabinet next week and the auctioning of 54 shortlisted coal blocks were expected to start in about two months.

Tata Power Managing Director Anil Sardana said as India and China are likely to drive the demand for coal in the future, there is a need to examine the key regulatory issues and the strategic options in this space.

“As overseas coal acquisition is a challenge, the government should facilitate bilateral government-to-government deals on energy resources in overseas nations and enable bulk off-take, including building & blocking of Rail-road and Port facilities,” said Sardana.