Mudajaya secures coal supply deal for IPP in India

Mudajaya secures coal supply deal for IPP in India
Business & Markets 2013
Written by Fatin Rasyiqah Mustaza of theedgemalaysia.com
Tuesday, 10 September 2013 10:10

KUALA LUMPUR: MUDAJAYA GROUP BHD [] has finally secured a coal supply agreement for its 26% owned independent power producer (IPP) RKM Powergen Pvt Ltd (RKMP) in India.

The supply agreement, which is sufficient to meet the full requirements for RKMP’s power plant in Chhattisgarch, would be a relief to Mudajaya shareholders who have been concerned that the group’s power project might hit a snag due to difficulty in sourcing coal supply there.

Mudajaya announced to Bursa Malaysia yesterday that its associate RKMP had on Sept 3 signed the coal supply agreement with South Eastern Coalfields Ltd (SECL).

According to the announcement, SECL will supply coal for Phase 1 of the 4x360mw coal-fired thermal power plant in Chhattisgarh, which consists of 1x360mw installed capacity of the power station.

Mudajaya said the agreement would remain in force for 20 years, and it could be extended upon mutual agreement by both parties.

According to Mudajaya’s filing with Bursa Malaysia, one of the salient terms of the agreement is that the annual contracted quantity of coal supply would be 1.69 million tonnes as per the original letter of assurance issued earlier by SECL.

Additionally, the group said the ‘as delivered price of coal’ for coal supplies pursuant to the agreement will be the sum of base price, other charges and statutory charges as applicable at the time of the coal delivery.

Last year, there were concerns over Mudajaya’s venture into India’s IPP sector as the Indian government had issued a directive to Coal India Ltd (CIL) to ensure an adequate supply of coal for the power sector.

This was due to heavy rainfall that caused several power stations to stop or cut production, leading to blackouts in some parts of India.

The Indian government had directed CIL and other power producers to sign the fuel supply agreement (FSA). India’s national electricity company, NTPC Ltd, had in August signed 28 out of 29 FSAs for its power plants totalling 14,010mw in capacity. NTPC is CIL’s biggest customer.

According to Alliance Research, which met up with Mudajaya’s management last month, phase 1 of the RKMP power plant will be ready for commercial operations by December and all four units by mid-2014.



This article first appeared in The Edge Financial Daily, on September 10, 2013.

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