Tata Power will use the new interests to secure its coal supplies, and has entered into a long-term coal off-take agreement with one of the units, Kaltim Prima Coal (KPC) for the supply of approximately 10 million tonnes per annum for its power plant at Trombay in India and future power projects.
Bumi president and director Ari Hudaya said the sale proceeds would be used to make Bumi’s coal subsidiaries debt free.
“We are excited about this strategic partnership with Tata Power which we would seek to expand to other areas of common interest,” Hudaya said.
“There are great synergistic opportunities for both the groups. We are also pleased with the outcome of our highly competitive auction process."
Tata Power managing director Prasad Menon said the Bumi subsidiaries, KPC and Arutmin Indonesia, are among the top three thermal coal mines in the world.
“This strategic partnership not only supports coal requirements for Tata Power's aggressive growth plans but also creates opportunities to own and participate in operating a world-class energy business overseas,” Menon said.
In the financial year ended December 31, 2006, Bumi's coal companies produced over 53Mt of coal with over 95% of coal sold to overseas markets.