Lanco Infratech-owned Griffin Coal’s threat to halt coal supply to Bluewaters Power Station in Western Australia unless prices are revised upward seems to have worked, with sources close to the development indicating that an agreement might be inked within a fortnight.
The sources said there could a price revision in favour of Lanco with respect to the supply contract with Australian firm Griffin Energy’s Bluewaters Power Station, besides some upfront fee.
Earlier, Lanco had indicated its intention to hike the prices of coal sold to the power plant and said it may suspend supply to Bluewaters Power Station, which accounts for as much as 10 per cent of power generation in Western Australia.
The company’s move earned the wrath of the local administration, which threatened the Indian infrastructure major with a coal export ban.
However, “All the issues with Bluwaters Power are settled. The company may formally announce the terms in two to three weeks’ time. There will be upward revision of coal price,” sources told PTI.
As per the agreement, Lanco will have to supply 1.6 to 1.8 million tonnes per annum to Bluewaters and according to experts, the supply price could be in the range of A$40 per tonne.
When contacted, Lanco Infratech CFO, Mr J. Suresh, without confirming the development, said talks are moving in a positive direction and the company cannot comment at the moment.
Bluewaters Power Station was set up to be sold to Sumitomo Corp and Kansai Electric Power Co for an enterprise value of around $1.2 billion.
Commenting on the development in the latest creditors’ update on its website, KordaMentha — an advisory firm specialising in corporate recovery, turnaround and restructuring — said the settlement would include an unspecified payment to Lanco from the proceeds of Bluewaters sale.
“To enable completion of the sale of Griffin Power, the settlement requires Griffin Energy to make a contribution to Lanco from the Griffin sale proceeds,” Kordamentha said.
Apart from Bluewaters, Lanco is also in a legal battle with Perdaman Industries, which has filed a A$3.5-billion (about Rs 16,600 crore) lawsuit in the Supreme Court of Western Australia, alleging that Lanco is not complying with a 25-year-long coal supply pact related to its upcoming Collie urea plant in Western Australia.
Mike Murray, an MLA in Western Australia, said in an emailed reply to a query from PTI that he offered mediation between the two warring companies, but the offer was declined.