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RELIANCE Natural Resources (RNRL), a part of the Reliance Anil Dhirubhai Ambani Group (RADAG), has decided to procure six ships by the next quarter to transport coal from international destinations to India for its proposed 4,000-mw ultra mega power project (UMPP) in Krishnapatnam.
The group has earmarked an investment of Rs 2,000 crore for its shipping venture, which will be spearheaded by a whollyowned subsidiary of RNRL. RNRL vice chairman Anil Shingvi told ET, "We are planning to buy some ships and will sign long-term charter contracts for some others. In total, we will procure six ships to import coal for the Krishnapatnam project from international markets."
Another R-ADAG official, who did not wish to be named, said: "The cost of transportation is a substantial component of the fuel cost. A control over it will not only make us more competitive, but also ensure reliable supply of fuel to our group," said another R-ADAG official.
A power analyst said R-ADAG will mostly import coal from Indonesia, where it bought three mines last year for Rs 2,400 crore.
According to a Mumbai-based shipping analyst, this is the best time for RNRL to get into the shipping business as the vessel prices have come down to historic lows.
In addition to the Krishnapatnam project, R-ADAG is also setting up power plants of 4000 MW each at Sasan and Tiliya. However, the group does not require to import coal for these projects as they would use domestic coal. The group's first greenfield power plant will come up at Sasan in Madhya Pradesh and is expected to generate about 9 million tonnes a year of fly ash as by-product. RNRL is also getting into the cement business to make good use of fly ash, a raw material used for cement production.
Earlier, Tata Steel had entered into an equal shipping joint venture with Nippon Yasen Kabushiki Kaisha (NYK) of Japan to manage its logistics. The JV caters to dry bulk and break bulk cargo (general cargo that is not containerised).
The shares of RNRL gained 3.66% to close at Rs 56.65 on the BSE on Wednesday. The stock has lost 2% in the past one week, but gained 15% in the past one month.
The group has earmarked an investment of Rs 2,000 crore for its shipping venture, which will be spearheaded by a whollyowned subsidiary of RNRL. RNRL vice chairman Anil Shingvi told ET, "We are planning to buy some ships and will sign long-term charter contracts for some others. In total, we will procure six ships to import coal for the Krishnapatnam project from international markets."
Another R-ADAG official, who did not wish to be named, said: "The cost of transportation is a substantial component of the fuel cost. A control over it will not only make us more competitive, but also ensure reliable supply of fuel to our group," said another R-ADAG official.
A power analyst said R-ADAG will mostly import coal from Indonesia, where it bought three mines last year for Rs 2,400 crore.
According to a Mumbai-based shipping analyst, this is the best time for RNRL to get into the shipping business as the vessel prices have come down to historic lows.
In addition to the Krishnapatnam project, R-ADAG is also setting up power plants of 4000 MW each at Sasan and Tiliya. However, the group does not require to import coal for these projects as they would use domestic coal. The group's first greenfield power plant will come up at Sasan in Madhya Pradesh and is expected to generate about 9 million tonnes a year of fly ash as by-product. RNRL is also getting into the cement business to make good use of fly ash, a raw material used for cement production.
Earlier, Tata Steel had entered into an equal shipping joint venture with Nippon Yasen Kabushiki Kaisha (NYK) of Japan to manage its logistics. The JV caters to dry bulk and break bulk cargo (general cargo that is not containerised).
The shares of RNRL gained 3.66% to close at Rs 56.65 on the BSE on Wednesday. The stock has lost 2% in the past one week, but gained 15% in the past one month.
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