India moves to raise coal output from old mines in push for power

NEW DELHI, June 20 Fri Jun 20, 2014 7:42am EDT

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NEW DELHI, June 20 (Reuters) - India's coal and power minister said he will seek environment ministry approval next week to raise output from coal mines as an interim step to augment supply for power generation, a focus area for new Prime Minister Narendra Modi.

Coal India, which accounts for 80 percent of the country's output of 562.6 million tonnes, has failed to meet its output target and made India a big importer, partly due to delays in securing environmental clearances.

"We've taken certain decisions in terms of requesting the environment ministry to allow additional mining for the coal mines which are already operational," Power and Coal Minister Piyush Goyal said.

He was speaking with reporters after meeting with billionaire Anil Ambani of Reliance Power Ltd, Naveen Jidal of Jindal Steel and Power, Gautam Adani of Adani Power and executives of other power producers such as Essar Power.

"We hope that a good amount of additional coal can be mined at least as an interim measure for a few years till we are able to sort out the problem which the sector has faced over the last five to six years," Goyal said.

India has the fifth largest coal reserves but is the third largest importer because of issues in raising output from existing mines, connecting remote mines with railway lines and inefficiency at heavily unionised Coal India.

The result is that many power companies, mainly in the private sector, are either forced to rely on expensive imports or cut generation. Blackouts are also common.

But Modi, whose landslide election victory last month came mainly on his promise to rejuvenate the ailing economy, wants to provide round-the-clock power supply to the population of about 1.2 billion. Millions still go without power.

Coal being the main source of power generation, Modi wants to reform the nationalised coal sector by bringing in private investment and possibly breaking up Coal India.

Goyal and Railway Minister D.V. Sadananda Gowda met last week and agreed to speed up work on three railway lines key to transporting 100 million tonnes a per year from remote mines.

Coal India says better connections could push its annual output up by up to 300 million tonnes from 462 million now. Without a rapid rise in output, India's coal supply shortfall is forecast to more than double to 350 million tonnes by 2016-17.

Goyal said he would also request Coal India allow third-party inspection of coal before loading to ensure uniformity of quality.

State-run power producer NTPC has long complained that it is forced to accept coal heavily adulterated with rocks and stones. (Additional reporting by Tommy Wilkes; editing by Jason Neely)

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