World Bank's no to coal-projects funding unlikely to affect Coal India

Cash-rich Coal India (CIL) is unlikely to be affected by World Bank's decision to limit investment. The miner has been funding projects from internal accruals and is confident of doing so in the future.

World Bank, which in the late 1990's had announced to lend $1.03 billion to Coal India along with a Japanese lending agency, recently announced that it would not be funding the sector, as such companies "have pushed back efforts to fight climate change by arguing fossil fuels are a cure to energy poverty, which is holding back developing countries".

"When it came to lifting countries out of poverty, coal was part of the problem - and not part of a broader solution," Rachel Kyte, the World Bank climate change envoy, was quoted saying at an event in Washington.

CIL, which accounts for 80 per cent of India's coal production, says there's nothing to worry thanks to healthy finances. Coal India took a total $484.4 million loan from World Bank and Japan Bank for International Cooperation (now part of Japan International Cooperation Agency) over a span of five years starting 1998, which has already been repaid.

"Of the $1.03 billion promised, CIL took only half of it. That too has been repaid more than a decade back. CIL has been successfully funding its projects since then and there is no reason it would find any difficulty in doing so," a senior CIL official said.

Due to the lack of major capex in the past, CIL has been able to accumulate cash. After accounting for this outflow and annual cash generation, it still has cash reserve of Rs 50,000 crore.

While it had been investing Rs 1,200-1,500 crore annually towards capex even couple of years back, CIL this year has set the capex target of Rs 5,000 crore. Besides it would be investing another Rs 6,000 crore on augmenting other infrastructure, including rail connectivity.

Apart from the ongoing coal projects, rail projects like the 44-km Tori-Shivpur and 53-km Shivpur-Kathautia railway linesin North Karanpura in Jharkhand; the 53-km Jharsuguda-Barpalli-Sardega railway line in lb Valley in Odisha, and the 180-km Bhupdevpur-Korichapan-Dharamjaigarh line in Mand-Raigarh coalfield, Chhattisgarh are also being funded by internal accruals.