India to rely on state miners to meet coal target - minister

By Tommy Wilkes

NEW DELHI (Reuters) - India will meet its target of doubling coal production by 2020 without the help of private miners, the country's coal and power minister said, ruling out new measures to entice cash-strapped companies to begin mining the commodity.

India wants to produce 1.5 billion tonnes of coal by 2020 to power its economy and reduce imports. State-owned Coal India Ltd, the world's largest coal miner, has raised production in line with reaching a target of 1 billion tonnes a year within four years and the government wants private miners to produce much of the remainder.

But only a few companies that won the right to mine coal for their power plants last year have started production as they struggle to recover their costs, while the ministry this month delayed plans to open up commercial mining to private firms because of weak demand and depressed coal prices.

Piyush Goyal, India's power and coal minister, told Reuters that state-owned companies including power producer NTPC Ltd, Steel Authority of India Ltd and National Aluminium Co Ltd would instead pick up the slack by expanding their own mining operations.

"That target I will meet even if (private companies) don't come in," he said in a interview on March 23. "In the days to come I'll be auctioning out more mines. I've already got my plans in place."

NTPC is on course to produce 300 million tonnes alone by 2020, said Goyal, a former investment banker.

India's success in boosting its coal output after years of missed production targets has been central to Prime Minister Narendra Modi's energy policy.

Despite environmental worries, India plans to continue to depend on burning coal to provide power for its 1.3 billion people, some 300 million of whom still lack access to electricity.

The government last year auctioned off captive mines, sites already near end-users such as power plants, to private firms such as Hindalco Industries Ltd and Adani Power Ltd.

But most companies have not begun mining and have warned that rules prohibiting them from passing on rising costs to end-users make it tough to recover their costs after aggressive bidding during the auctions.

Goyal, however, said he would stick with the current system.

"These coal mines were given out by a system where the price benefit would go out to the people of India. It was a transparent bid by independent people without any compulsion to bid any price," he said. "They bid and they got it."

While Indian demand for coal has been lower-than-expected, Goyal said a major reform of indebted electricity distributors would soon free these utilities to start buying more power, boosting demand for coal.

Total investment into India's energy sector reached around $50 billion this financial year, he said, with roughly the same level expected next year as the government tenders new wind and solar projects and upgrades transmission lines.

(Reporting by Tommy Wilkes; Editing by Christian Schmollinger)