India may ask state-run miner to import coal

India's government is considering asking state-run Coal India Ltd. (NSE:COALINDIA) to import coal and pool it with domestic supply to allow underperforming power plants to generate more electricity.

The idea was proposed last year but mothballed due to opposition from state governments, which balked at the higher cost of imported coal, according to a report in The Economic Times.

The Indian newspaper quoted an anonymous government official as saying that, despite the expense, it is important for the country's power plants to run at optimal levels.

"Pooling will raise cost of coal and overall electricity tariff by about 10 paise, but it will help plants generate more, particularly those plants which are receiving less coal," the official said, according to the newspaper.

One hundred paise equal one rupee, the country's basic unit of currency. One rupee is about two cents U.S.

With coal-based power plants in India struggling to meet demand for electricity, the world's largest coal miner on Friday began production at its first new major project in half a decade.

Coal India's Amrapali mine in the eastern state of Jharkhand is expected to yield 12 million tonnes of the fossil fuel per year. But that appears to be far from enough considering the subcontinent's thirst for electricity.

India remains the world's third-biggest coal importer although it possesses the fifth-biggest reserves.