India presses for coal supply to end power shortages

India ordered its monopoly coal miner to guarantee long-term supplies or face penalties.

It asked Coal India, the world's largest coal miner, to sign 20-year fuel supply deals with power projects that are due to be commissioned by 2015 and have an agreement with distribution utilities to sell power.

This would help power plants with an estimated capacity of more than 50,000 megawatts.

The government acted to alleviate chronic power shortages that hinder its economic growth. The decision followed intensive lobbying by top executives from India's power companies, who had sought the help of Prime Minister Manmohan Singh to boost supplies of coal.

Domestic coal supply has fallen short of targets, largely due to regulatory hurdles faced by miners, while poor infrastructure hinders the transport of imported coal, leaving many power plants running below capacity.

Coal India, which accounts for about 80 percent of coal production, aims to produce 464 million tonnes in 2012/13, and has already scaled down output target to 440 million tonnes in 2011/12.

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