The US-based Institute for Energy Economics and Financial Analysis (IEEFA), in a report on GVK’s $10-billion Australian coal project, has stated that it is financially unviable.

The report, titled “Stranded: A financial analysis of GVK’s proposed Alpha Coal project in Australia’s Galilee basin,” observes that the Alpha coalmine, port and rail project is uneconomical and represents an unacceptable level of risk to potential investors.

Tom Sanzillo, IEEFA’s co-author, states that it is a quagmire, not an investment. The company lacks the financial capacity to deliver, he says. Greenpeace had commissioned the report.

The report comes in the backdrop of the Hyderabad-based company being in negotiations with Australian rail operator Aurizon for the construction of rail infrastructure.

The report states that the company is highly leveraged. The project confronts potentially insurmountable regulatory, environmental, operational, logistical and financial hurdles, it points out.

All these have the potential to delay the project implementation and escalate costs. GVK acquired Galilee basin coal deposits from Hancock prospecting for $1.26 billion in 2011. It was considered as Asia Deal of the year.

‘Motivated campaign’

“There is a current activist motivated campaign under way, which is envisaged to continue internationally for a number of weeks, to discredit the use of coal and to curtail the growth and development in mining, transport and other sectors where infrastructure/construction is required,” GVK said in a statement.

The company has received most of the environment environmental approvals.

“Our projects are financially robust with some of the lowest operating costs in the global coal industry ($55 per tonne Free on Board) and represents a very large high quality and new source of low ash, low sulphur, low gas thermal coal, which is now in far higher demand,” it further said.

> rishikumar.vundi@thehindu.co.in

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