The Indian coal ministry has decided to bar captive coal miners from raising production beyond the approved level, rejecting industry demands and the proposal from the Planning Commission to allow excess output to ease fuel scarcity.

Government officials said that coal ministry has prepared the policy, but is waiting for law ministry's approval before notifying it. Under the policy, surplus coal should be sold to state run Coal India Ltd at price lower than production cost.

The policy said that the Coal Mines Nationalisation Act of 1973 allows coal from captive block be used exclusively for specified end use project and production of surplus coal should not result in any undue advantage to captive block owner.

The policy said coal so transferred to Coal India Ltd should disposed by E auction.

The coal ministry official said government was concerned about misuse of diversion of excess coal to other projects.

Association of Power Producers director general Mr Ashok Khurana said government should enable surplus coal to be disposed off in a manner that incentivises coal producers.

Of 193 coal blocks allotted over 18 years to companies for captive use, only 28 are in production. Against a target of more than 90 million tonnes, only 38 million tonnes is being mined out from these mines.

(Sourced from ET)