New Delhi: Out of 87 auctioned coal mines to date, only a few have been successful in receiving financing support. This was disclosed by M. Nagaraju, Additional Secretary and Nominated Authority, Ministry of Coal during a stakeholder consultation to promote “Funding of Commercial Coal Mines in India”, here today.
Emphasising the imminent need of financing coal mines, Nagaraju, who chaired the event, called upon banks and financial institutions to expedite the financing in the coal sector.
The event focused on major concerns pertaining to the financing of commercial coal mining and solicited feedback and suggestions from all stakeholders.
Given coal mining is capital intensive, the coal mine allocatees highlighted possible bottlenecks being faced in availing financial assistance such as high cash margin in bank guarantee issuance, stringent pre-disbursement conditions, and negative outlook of the coal sector in the banking fraternity, among others. They requested relaxation in the same.
The banks said they were willing to be flexible on financing coal mines but that was subject to demonstration of, among other things, project viability, and equity infusion visibility in the presence of a detailed business plan.
Based on the feedback, Nagaraju, the Nominated Authority, suggested some enablers to facilitate ease of coal financing in India such as Banks/FIs may designate Nodal Officers for coal mine financing and establishing detailed policies, Banks/FIs exploring participation in initial stages (Vesting Order/Encumbrance Certificate/Financing Cost and other approvals), and Coal Mine Allocatees to formulate detailed business plans showcasing project viability before approaching banks for financing needs.
Presentations were made by Ajitesh Kumar, Director, Ministry of Coal on the commercial coal mine auctions process and extant enablers for funding commercial coal mines and Ashok Sharma, Chief General Manager, State Bank of India (Project Finance Strategic Business Unit) on SBI’s commercial coal funding policy. Dr Sanjay Kumar, Director of the Department of Financial Services (DFS) also addressed the meeting and showcased the support of the DFS, Ministry of Finance to facilitate coal mine funding.
– global bihari bureau
