Reliance Power wins $56-mn arbitration award in Indonesia coal mine dispute

The contractual dispute is in relation to issues faced over starting operations in three coal mining concessions in Indonesia that Reliance Power had acquired in 2010

Anil Ambani-promoted Reliance Power on Thursday said one of its subsidiaries has won an arbitration award in a contractual dispute over its Indonesian coal mines. The company will receive $56 million as compensation.

“Reliance Power Netherlands BV, a wholly-owned subsidiary of Reliance Power, has won an international arbitration award of $56 Million against Prestige Capital Holdings Ltd (a Seychelles based Company) and Kokos Jiang," R Power said in a statement. 

In 2010, Reliance Power had acquired 100 per cent economic interest in three coal mining concessions in Indonesia. This was acquired from Sugico Group, which is owned by Jiang. The contractual dispute is in relation to issues faced over starting operations under these mining concessions. 

According to the company, these mining concessions have total coal resources of around 1.5 billion tonnes with the potential to produce up to 30 million tonnes of coal per annum.

In the 2010-2011 period, major power producers in India saw investments in overseas coal assets as a lucrative option to secure fuel supply for their power business back home. Reliance Power was amongst others like Tata Power, who chose to invest in coal assets in Indonesia. However, most of these overseas investments by power companies ran into rough weather owing to fall in coal prices, change in Indonesia coal import policy, environmental issues and other problems faced in starting operations.

The arbitration proceedings were conducted by an Arbitration Tribunal constituted under Singapore International Arbitration Centre (SIAC) rules in Singapore.