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C. Shivkumar

Also seeks involvement of investors in financial sector

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Bangalore Jan. 23 The European Bank for Reconstruction and Development (EBRD) has sought investments from Indian energy companies for developing coalmines and gas fields in Eastern Europe and Russia.

Speaking to Business Line, the EBRD President, Mr Jean Lemierre, said: "We have spoken to some of the top companies in India and we would like them to invest in East Europe, Russia and even Mongolia." Mr Lemierre declined to name the companies. He, however, added that they are some of biggest private sector companies in India. Indications are that the discussions were held with the Tata group and Reliance group — with both companies having interest in energy.

Importing Coal

The EBRD has proposed that both the coal and gas sectors in the target regions could be developed as backward linkages for fuelling India's large coastal power projects that uses coal or gas.

Mr Lemierre said, "We are prepared to help Indian investors in developing these interests." Indian power producers have been importing coal recently though most of them are through the spot markets at prices in excess of $60 per tonne.

Only the private sector Nagarjuna Power Company has entered into a five year fixed price contract at $50 per tonne with Glencore for supply of steam coal. The EBRD, he said, was willing to partner Indian investments in the coal/gas development projects in the region. He said the bank could provide support in the form of syndications of long-term loans for the development of the East European projects.

Foreign Investments

Asked whether the Russian moves in nationalising the Yukos Oil and detention of its Chief Executive, Mr Mikhail Khodorkovsky, was acting as deterrent to foreign investments in the region, he replied, "We fully appreciate the Russian Government's stand on the issue. This has not prevented Europe from pouring investments into the region. So it should not be of any particular concern to Indian investors." The EBRD also wants involvement of investors in the financial sector in East Europe. Countries such as Romania, Slovakia and the Czech Republic would require lease-financing support from Indian companies and investments in the banking sector.

However, not many bankers are keen to step into Eastern Europe and have confined their preference to Russia. State Bank of India and Canara Bank have joint venture in Russia.

Bilateral Trade

Besides, ICICI Bank also has an office in Moscow. Both the public and private sector banks are looking for greater presence in Russia and in the Commonwealth of Independent States. Indian banks preference is for Russia and the Central Asian Republics in view of historical connections and burgeoning trade between the regions. India's bilateral trade with Russia is estimated currently at $5 billion and it is expected to touch $10 billion over the next four years.

However, the EBRD wants SBI and ICICI also to extend reach into Eastern European banking sector. Mr Lemierre said, "The region needs help in reforming the banking sector. But banking relations will also act as impetus for trade."

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