Amid widening gap between demand and supply of coal in the country, CIL board has decided to exit from International Coal Ventures Ltd, a special purpose vehicle formed to acquire mines abroad, a move that may hit the country's efforts to buy overseas reserves.
The decision to exit from consortium was taken by the board in the meeting held on Friday.
"Coal India (CIL) board agreed to walk out of ICVL. The board felt that it was not advantageous for Coal India to be part of the consortium. Rather, the venture on the part of CIL involved financial burden without commensurate advantage," a source close to the development told PTI.
Meanwhile, sources said there was consensus among the board members on CIL's willingness to opt out of the joint venture.
Last week, a source in the Coal Ministry had said, "Informally, CIL has said that it wants to quit ICVL, but the Coal Ministry has not received any proposal from CIL on the same."
When asked for the reasons for exit, sources had said CIL does not find any benefit in the venture.
When contacted, ICVL Chairman C S Verma had said, "I have not received any such communication and I don't think that the PSU firm will quit ICVL."
ICVL, a joint venture between companies like SAIL, CIL, and NMDC - incorporated in 2009 - was conceptualised by the Steel Ministry for securing much-needed coking coal and thermal coal assets in overseas territories.
SAIL and CIL each hold 28 per cent stake and RINL, NMDC and NTPC 14 per cent each in ICVL.
Last year, NTPC wished to exit from the consortium. "NTPC had made a presentation to the Power Ministry stating that the coal requirement of NTPC and steel firms are different. NTPC needs thermal coal and RINL coking coal, there a is clash of interest." an NTPC official had said.
ICVL, which has Rs 10,000 crore authorised capital and Rs 3,500 crore equity capital, has not been able to taste any success since its formation.
The consortium aims to be an owner of about 500 million tonnes (MT) of met coal reserves by 2019-20.
The CIL board approval for opting out of the consortium comes at a time when the country is facing acute coal shortages.
The gap in the demand and supply of coal widened to 161.5 MT last fiscal. In 2010-11, the shortfall of coal was about 132.8 MT, while in 2009-10 it was 90.5 MT, according to an official document.