"CIL has decided to diversify into the power generation business and the company is currently discussing it with NLC for starting a joint venture under its subsidiary MCL," Coal India sources in Kolkata told PTI.
The CIL board, the sources said, has given in principle approval for the new project.
The board has been asked to prepare the draft of the MOU, the sources said. Asked why the company has decided to diversify into power generation, the sources said, "We want to give finished products to the country and the power produced by the new company will be cheaper."
The government has no objection to CIL going for power generation business. CIL and NLC would have 50:50 equity in the new project, which would cost about Rs 8,000 crore (Rs 80 billion), the sources said.
CIL has posted a profit of Rs 6,825 crore (provisional) in 2004-05 as against Rs 4,800 crore (Rs 48 billion) in the previous year.