Centre tells states to take steps to become self-reliant on coal production

The Union government has directed states to clear their electricity bills and take measures to become self-reliant on coal production to mitigate the power crisis that has gripped large swathes of the country. Several states are grappling with a shortage of coal and have resorted to power holidays or power outages as they are unable to meet the spike in demand for electricity.

"State discoms owe over Rs 1.1 lakh crore to power producers. The government has asked states to quickly clear unpaid dues to enable the purchase of coal to produce power," a government official told CNBC-TV18.

The government has convened a meeting of high-level investors in Mumbai on Friday on reopening closedor discontinued coal mines and launching "coal gasification projects".

On Wednesday, coal ministry officials said there was ample stock of domestic coal available at a quarter of the price imported coal. "With state power generation companies owing over Rs. 7,900 crore to Coal India, many states aren't getting enough coal," a coal ministry official said.

The official said energy security remains a top priority for the Union government, but added that it doesn't have infinite logistical capacity to carry domestic coal. "Hence, states should try to maximise production from captive mines," the official said.

A captive coal mine is a facility the output of which is meant solely for the company that owns it. A government order last year allowed these mines to sell 50 percent of their output to reduce burden on public coal producers.

The official said Punjab and West Bengal are delaying required the output from captive coal mines, while the Chhattisgarh government hasn't allocated additional land to Rajasthan, which impeded output from the latter's captive coal mines.

Further, the official said, the Centre has asked states to import coal for 10 percent blending and revive imported coal-based plants. According to the official, states have been told to swiftly resolve disputes in Power Purchase Agreements (PPA) for imported coal-based plants to raise power production as well as import "part quantity of coal on medium-term basis to get it at competitive rates".