The deal, the first of its kind in India, will also see PTC paying the two companies a fee to generate electricity
Power trading firm PTC India Ltd will supply coal to the plants of Hyderabad-based generation firms Simhapuri Energy Pvt. Ltd and Meenakshi Energy Pvt. Ltd in return for an equivalent value of electricity in an effort to tie up long-term sources of power.
The deal, the first of its kind in India, will also see PTC paying the two companies a fee to generate electricity.
“We will be supplying around 1.5 million tonnes per annum (mtpa) of coal to them for generating electricity for us. We will be paying them a fee for doing so. We have adopted this strategy as it will provide us with an assured electricity supply for our power-trading business,” said a senior PTC executive, who did not wish to be identified.
The two companies will generate 270MW of power each for PTC. Both Simhapuri and Meenakshi are merchant power plants, which means the companies are free to sell the power to customers of their choice. Simhapuri has a generation capacity of 540MW and Meenakshi 400MW, and both projects are coming up near the Krishnapattnam port in Andhra Pradesh.
Yarlagadda Harish Chandra Prasad, chairman, Malaxmi Infra Ventures (India) Pvt. Ltd, the company behind Simhapuri Energy, could not be reached for comment. A spokesperson for Meenakshi Energy did not respond to queries.
PTC will supply coal to these projects from the coal blocks that it plans to acquire in Indonesia.
The company plans to create a $1 billion (Rs3,960 crore) fund for the acquisition of overseas blocks. Prices of imported coal, including freight, are around $90 (Rs3,546) per tonne. The company has set a target of bringing 15mtpa of coal to India for a minimum period of 30 years, enabling it to supply fuel to projects with an aggregate generating capacity of 5,000MW—and, as the two deals with Simhapuri and Meenakshi show, get power in return.