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Tata Power sets sights on coal assets abroad

Tata Power is looking to acquire coal assets in the US, Canada and Colombia as surging energy supplies from shale gas have made the fossil fuel cheaper.

“The company is seeking coal assets in the US, Canada and Colombia as prices of the fuel drop amid surging shale gas supplies in North America. Initial purchase talks are on for several mines,” Anil Sardana, managing director and CEO of Tata Power, told The Telegraph.

Cheap coal may help Tata Power to turn its plant profitable following the purchase of mines in Indonesia turning sour after they pegged their coal to global benchmark prices.

The US power generators have turned to shale gas freeing up coal reserves. Shale extraction uses hydraulic fracturing, which involves blasting water, sand and chemicals underground to release trapped oil and gas.

Sardana said, “A few consignments have been sourced from Colombia and the USA. The coal from these mines will be used for generation. This is a part of Tata Power’s initiative to ensure fuel security for the country.”

The company aims to more than double its generation capacity to 18,000 megawatt (MW) from all sources by 2022.

“Tata Power has an ambitious plan to keep fuelling its multi-fold growth across the power value chain. For the next three years, the company has sketched out a capex of roughly Rs 2,500 crore per annum,” Sardana said.

Tata Power said the focus areas would be “scaling up of generation capacity and value-added businesses” such as services and trading.

Owing to the current financial stress in the power sector, there are assets that may be available for acquisition.

Stating that the company was interested in buying a sick private sector unit, Sardana said, “We are evaluating opportunities to grow organically and inorganically. However, this is under exploration and no specific opportunity has been finalised as yet.”

He said the company had prioritised seven countries for opportunities in the conventional energy space. Besides, the company continues to evaluate investment opportunities in Africa, Turkey, West Asia, South East Asia and the Saarc (the South Asian Association for Regional Co-operation) region.

The company generates power from different fuel sources — thermal (coal, gas and oil), hydroelectric power, renewable energy (wind and solar photo-voltaic). Its current generation capacity is 8,613MW.

Source: Telegraph Kolkata