The Anil Ambani group-promoted Reliance Power Ltd (RPO) is likely to tie up with an American company for strategic partnership in coal mining.
NEW DELHI: The Anil Ambani group-promoted Reliance Power Ltd (RPO) is likely to tie up with an American company for strategic partnership in coal mining.
The tie-up will be for three mines that the company will be developing for the Sasan ultra mega power project (UMPP) in Madhya Pradesh.
Mining cost and approvals are crucial for financing the 4000 MW power plant since the entire project economics depend on it.
“It will be perhaps for the first time in the country that coal mining will be funded through project finance (or non-recourse financing implying that debt is repaid from revenue generated from the project). Once a mining lease and environmental clearance are granted, we will be able to achieve financial closure for the Sasan project,” said a senior group executive.
Unlike Krishnapatnam and Mundra UMPPs which are coastal power plants based on imported coal and for which fuel supply agreements will be crucial for tying up finances, Sasan is dependent on coal mining.
Power plants, in general, require power purchase agreements to be in place to get the entire financing tied up (usually called financial closure).
The name of the American company was not known. When asked, the senior executive cited confidentiality clause.
It was likely that a formal memorandum of understanding or an agreement would be signed after the first week of January.
Besides the American company, sources said RPO was also in talks with Russian and Australian companies for preparing mining plans for the three mines.
“The three mines together are estimated to hold reserves of about 700-800 million tonnes,” claimed a source.
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