Research by Greenpeace has found that the world's largest coal producer, Coal India Limited, is misleading potential shareholders by concealing the true level of its extractable reserves, as it prepares to sell additional shares to international investors.

According to the analysis, "Coal India: Running on Empty?"(1), the company has failed to disclose to stock exchanges an internal assessment that shows its extractable coal reserves are 16% less than stated at the time of its 2010 listing - a violation of Indian stock exchange rules. Coal India continues to claim via its website that it has 21.7 billion tonnes of extractable coal reserves, yet a review of its own internal documents undertaken by Greenpeace and the Institute for Energy Economics and Financial Analysis (IEEFA) has shown that the company has only 18.2 billion tonnes of extractable coal, as per the United Nations reserve classification system (2). At targeted production rates, these reserves could be exhausted in 17 years.

Greenpeace India has filed an official complaint with the Indian Stock Exchange regulator against Coal India for concealing material evidence on the scale of their coal reserves, in contravention of the terms of the Listing Agreement under the Indian Securities Contracts Regulations Act, 1956.

Coal India has contracted four of the world's largest banks, Bank of America, Deutsche Bank, Goldman Sachs and Credit Suisse, to push its new share offer to international investors. In light of this evidence, these banks have a moral and legal responsibility to ensure that material facts relating to the company's reserves are disclosed to investors.

The banks engaged in this new share option and the executives of Coal India should be aware that over reporting of reserves can have significant consequences. In 2004, when oil giant Shell deliberately overestimated its reserves by around 15%, significant investor anger led to a restructuring of the company, the departure of the chairman and two other senior executives, and a series of high profile and expensive legal cases.

Commenting on the findings, Ashish Fernandes of Greenpeace said: "Coal India is trying to pull the wool over the eyes of its present and future shareholders by hiding the fact that its extractable reserves are almost a fifth less than it claims. Coal India has a legal duty to tell the truth and they are failing to do that."

"The big banks whose reputations are already tarnished following the 2008 banking crisis should be wary of getting into bed with Coal India, which is hiding the true nature of its reserves. This might be another opportunity for these four banks to turn a quick profit, but it is a recipe for disaster for potential investors in Coal India."

The findings of the disparity between what Coal India claims are their reserves and what the reserves actually are will have a significant impact on the Indian Government's coal power expansion plans. India plans to add over 100,000 MW of new coal fired power by 2017, even though it is struggling to fuel existing coal power plants. The government's model has been designed on the basis of what they have been told are the available coal reserves. This shortfall in the availability of domestic coal will either scupper expansion plans for new coal fired power stations or increase reliance on costlier imported coal. Coal and oil imports have been blamed for India's ballooning Current Account Deficit.

"If Coal India wants international investors, it must learn to play by international investment rules. A conflicted coal reserve estimate creates a misleading impression of company value", said Tom Sanzillo, Director of Finance for the U.S. based Institute for Energy Economics and Financial Analysis.

Notes to Editors:

(1)