Gail, Coal India Announce Joint Venture To Set Up Synthetic Natural Gas Plants

Gail (India) Ltd., in collaboration with Coal India Ltd, has announced on Tuesday a joint venture, Coal Gas India Ltd, with an authorised share capital of Rs 11 crore, as per a notification to the stock exchanges.

The object of the joint venture is to create and augment necessary plants for utilising synthetic natural gas, including captive coal mining, coal beneficiation, import of coal equipment and infrastructure facilities, including other associated facilities for processing of coal, added the filing.

Coal India has a 51% stake in the venture, while Gail (India) owns 49%.

Recently, US President Donald Trump stated that he's authorising the government to immediately begin producing energy with “beautiful, clean coal”, reported Bloomberg, adding that Trump vowed to open coal-fired power plants.

Energy Secretary Chris Wright said earlier this month that the administration was working on a “market-based” plan to stem the closing of US coal-fired power plants. Coal accounts for about 15% of power generation in the US today, down from more than half in 2000, according to the US Energy Information Administration.

Bloomberg further mentioned that an additional 120 coal-fired power plants are scheduled to shut down in the next five years in part because of environmental regulations that have made them uneconomic, according to the America’s Power trade group representing utilities and miners such as Peabody Energy Corp. and Core Natural Resources Inc.

Shares of Gail ended 1.97% lower at Rs 177.70 apiece, with Coal India also seeing a similar decline of 1.90% to Rs 398.30 per share. Both the companies underperformed the benchmark NSE Nifty 50, which ended 0.04% higher.

Gail's share price has declined 7.06% year-to-date but has increased 1.95% in the last 12 months. Coal India's stock, however, has increased 3.58% year-to-date but has given negative returns in the 12-month period.

27 out of 35 analysts are bullish on Gail, while 18 out of 24 researchers have a 'buy' call on Coal India, as per Bloomberg data.