State-run NTPC Ltd., India's biggest power producer, is evaluating an offer to buy a South African coal mine to secure fuel supplies as it embarks upon a near $10 billion plan to expand capacity to meet the Asian nation's rising demand.
NTPC aims to buy at least one coal mine overseas in the fiscal year that started April 1, Chairman R.S. Sharma told reporters Tuesday. It may acquire a South African company for about $1 billion, the Mint newspaper reported, citing a person aware of the development it didn't identify. The report didn't name the company.
"We are in preliminary stages of discussion," Mr. Sharma said, declining to elaborate further.
About 86% of the company's installed capacity of 28,350 megawatts use coal to fire its generators, making secured supplies of the fuel critical for operations. NTPC has been scouting for assets in Indonesia, South Africa and Mozambique as local supplies are typically inferior in quality and aren't enough to meet demand.
The generator has appointed Australia's Macquarie as advisors for buying coal mines in Indonesia, Sharma said Aug. 20. NTPC is adding more than 12,000 MW of capacity based on the fuel as part of the nation's plan to double electricity output by 2017.
The company will also soon start the process of acquiring land for its Pakri Barwadih coal mine in the eastern state of Jharkhand, and may start production within a year of buying the land, Mr. Sharma said.
NTPC has been allocated six coal blocks in the country with estimated geological reserves of more than 3 billion tons and an output potential of 48 million tons per year. Still, it has missed production targets due to delays in getting necessary government clearances.
NTPC is in talks with Petronet LNG Ltd. to source 2.1 million metric tons of liquefied natural gas for its plant in Kayamkulum in the southern state of Kerala.
The plant currently has a capacity of 350 MW, and NTPC plans to expand it to about 2,300 MW. Petronet has already committed to supply 1.2 million tons of the fuel to NTPC.
