Date | Sept 21, 2016:
As part of its energy security efforts, the Indian government is planning an ambitious coal project in Mozambique which involves mining and creating infrastructure for transportation of the fuel to India.
According to preliminary contours of the project still in the works, coal mining will be done by state-owned firms such as Coal India Ltd, with a railway network being set up to bring the coal to a greenfield port built by Jawaharlal Nehru Port Trust (JNPT). The coal may then be brought to India to fuel its electricity demands.
“This project will involve coal block development and mining. It will also involve construction of a railway network for the movement of coal to a port which will be constructed by JNPT,” said a government official requesting anonymity.
Coal has an important place in India’s energy mix. Of India’s installed power generation capacity of 304,761 megawatt (MW), 61% or 186,293MW is fuelled by coal. Given that India wants to improve its per capita electricity consumption of 1,010 kilowatt hour and double it in the next seven years, coal will continue to play an important role in its fuel mix.
In response to a direct query by InfraCircle on the JNPT’s role in the project, Union minister for road transport, highways and shipping Nitin Gadkari said that discussions are on.
“It’s at a preliminary stage, nothing has been finalised. We are discussing it,” Gadkari said.
India has a presence in the Mozambique’s energy sector with state-run firms—ONGC Videsh Ltd, Oil India Ltd and Bharat Petroleum Corp. Ltd—holding a 30% stake in area 1 of the Rovuma gas block. Also, state-owned International Coal Ventures Pvt. Ltd acquired stake in three coal mines.
Railway ministry officials said they were unaware about the current proposal.
This comes in the backdrop of Prime Minister Narendra Modi visiting Mozambique in July.
“Our trade and investment ties have particularly flourished in recent years. We want to build further on it. For this, India remains ready and committed to share its experiences, technology, capacity and concessional credit with Mozambique, in line with your priorities,” Modi said in a statement during his Mozambique visit.
Queries emailed to the spokespersons of ministries of railways, coal, external affairs, embassy of Mozambique in New Delhi and CIL remained unanswered.
This also comes at a time when CIL’s subsidiary Coal India Africana Limitada, formed with the aim to develop coal projects in Mozambique, surrendered its exploratory block, The Economic Times newspaper reported on 9 September.
Also, RITES Ltd and Ircon Ltd, part of Companhia Dos Caminhos De Ferro Da Beira, SARL, had to exit the Biera rail corridor concession which it had won in 2004.
Experts say that the coal development project depends on its economics.
“Unless the overall economics of the project are clear one cannot comment. Considering the construction of railway line and port facilities, if the economics of the cost of production of coal makes it competitive in the global coal trade, then it is immaterial whether it is brought to India or sold outside,” said Ram Vinay Shahi, India’s former power secretary.
According to India’s external affairs ministry, “Bilateral trade between India and Mozambique during 2014-15 was $2,396.58 million with Indian exports at $2,070.84 million registering an increase of 64.72% and Indian imports at $325.74 million registering an increase of 11.19% over 2013-14.”
India has been trying to expand the scope of its relationship with Mozambique with the Union cabinet in July approving the signing of the air services agreement between the two countries.
“Our partnership is also driven by a convergence of capacities and interests… Whether it is agriculture, health care or energy security,” Modi said during his July visit.
(Source: http://www.vccircle.com/)