The Indian Railways may join the proposed Coal India (CIL) and Shipping Corporation of India (SCI) JV with CIL?s coal import plans demanding an end-to-end logistics solution. CIL chairman Partha S Bhattacharya, on the sidelines of a coal consumers meet, said CIL has already started talks with the Railways in terms of roping it in the JV, though matters are yet to be crystallised.
Railway minister Mamata Banerjee earlier stated that the Railways was looking into the possibility of tying up with CIL to supply coal to consumers.
Bhattacharya said 28 companies across the globe have already been shortlisted for long-term offtakes and that there will shortly be a financial bid following which suppliers will be finalised.
He said CIL was planning to import around 25-30 million tonne a year and supply it to consumers at a discounted rate.
While CIL would be the main purchaser, SCI would bring it to Indian ports from various destination across the globe. Although the earlier plan was limited to unloading the coal at the ports from where consumers would lift, with the possibility of railways joining the venture, the coal might reach consumers? doorsteps.
However, there are issues with railway rake availability but according to Bhattacharya, in case of a JV where there would be investment in creating port capacity and acquiring ships, the railways might create additional facilities exclusively for the JV company, which could be a dedicated service for the consumers of imported coal.
CIL and SCI are already in talks with the Vizag port and some other western coastal private ports for handling the imported coal.
He said through offering foreign coal at a discounted rate CIL was actually trying to create an appetite for imported coal as well as make present importers customers of CIL.
?We plan to offer imported coal at such a rate that companies currently involved in direct imports will be tempted to take coal from us,? Bhattacharya said, adding that as a ?bulk importer we will be able to play a volumes game, in which the cost advantage can be passed on to the consumers.?
A CIL official felt there would be an element of cross subsidy in this business, which ideally should not happen.
CIL should not transfer any part of its profitability to the JV company, since that would also add to the Railways’ and SCI’s books of account, the official said.
The two companies have also initiated the process of appointing a consultant for due diligence on the matter.
The consultant will first look at the feasibility of the proposed joint venture and then plan how it can be expanded to three partners.
Also, it is likely that the new joint venture sets up port terminals as well.