India should permit private coal mining – panel

* Coal shortages to hit power generation targets – panel

* Faster environment clearances needed for mining

* Low electricity tarrifs, thefts impeding sector growth

By C.J. Kuncheria and Matthias Williams

NEW DELHI, July 23 (BestGrowthStock) – India should allow private
firms to mine coal to plug supply shortages and boost power
generation key to propelling Asia’s third-largest economy to
double-digit growth rates, a top government advisory body said.

The government should also speed up environmental
clearances for coal mines and build more roads and railtracks
around “promising” coalfields, to make up a coal shortfall
predicted to double to around 242 million tonnes in the five
years to 2017.

“The rising demand-supply gap for coal points to the
urgency of removing constraints on domestic coal production,
and also taking steps to facilitate imports,” the Planning
Commission said in a note seen by Reuters.

State-run miner Coal India, which is slated for an initial
public offering, “can remain a public sector company, but
private investment in coal mining should be permitted”, it

India currently does not permit commercial mining of coal
by private firms, but allows power producers to access “captive
blocks” for their fuel needs.

The country has 267 billion tonnes of coal reserves, 40
percent of which have been proven, but social and environmental
issues have kept the pace of production growth low.

Prime Minister Manmohan Singh’s government is pushing to
overhaul India’s crumbling infrastructure to support
double-digit growth rates as in China and lift hundreds of
millions of out poverty. The economy is currently seen growing
at 8.5 percent.

But India will probably trip on its investment targets to
build up power plants, ports, railways and roads between 2012
and 2017, as it has repeatedly done in the past.

The likely capacity addition of 62,000 megawatts (MW) in
the five years to 2012 falls short of the 78,000 MW target and
is “barely sufficient to achieve the 8.1 percent growth” rate
aimed for the period, the Planning Commission note said.

“If the economy is to move to a higher growth path of 9-10
percent in (2012-2017), we have to aim at even faster expansion
in power generation in the years ahead,” it said.

The note was prepared ahead of Saturday’s meeting of the
National Development Council, which comprises the prime
minister, federal cabinet ministers and state chief ministers.

It also said state-run power distributors should cut losses
from low electricity tariffs and thefts if they were to be
financially viable and support the sector’s growth.

“We are very worried about the state of the distribution
system,” Planning Commission deputy chairman Montek Singh
Ahluwalia told reporters on Friday, urging states to give “high
priority attention” on power.

(Editing by Andrew Marshall)

India should permit private coal mining – panel