Coal India unit revives plan for $1.6 billion power plant

MUMBAI (Reuters) - A unit of Coal India Ltd has revived a proposal to set up a 1,600 megawatts power plant in Odisha at a cost of 90 billion rupees, an official said, marking the world's largest coal miner's foray into the power sector.

The state-owned miner may approach its board for approval of the plan in the next few months, after getting a final nod from the coal ministry, A.N. Sahay, chairman of Mahanadi Coalfields Ltd (MCL) said on Thursday.

The project was originally announced by MCL, a subsidiary of Coal India, in 2011 to utilise excess stocks at its mines in Odisha's Sundergarh district, as evacuating coal from the area was difficult.

"The area has a lot of coal locked up, but we aren't able to transport it due to logistics. Its better to burn the coal and generate electricity," Sahay told Reuters over telephone.

Coal India, which accounts for about 80 percent of India's coal output, has been under pressure from the government and power producers to boost supply, but has struggled to raise production due to delays in environmental and regulatory approvals.

MCL has formed a joint venture company through which it would hold 49 percent stake in the project. It has invited expressions of interest (EOI) from potential partners and received nearly 40 responses, Sahay said.

Once approved, the project would take three to four years for completion, and is expected to generate power at around 2 rupees per unit, he said. (Reporting by Prashant Mehra; Editing by Jijo Jacob)