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Coal India import tender seeks 5 million tonnes for power firms

A local woman prepares to carry coal at an open coal field at Dhanbad district in Jharkhand September 19, 2012. REUTERS/Ahmad Masood/Files

NEW DELHI (Reuters) - Coal India Ltd (NSI:COALINDIA.NS - News), the world's biggest coal miner, has floated a tender seeking to import 5 million tonnes of coal to meet demand from power producers as the company continues to lag its production targets.

The state-owned miner produces more than 80 percent of the country's coal. However, its inability to raise output in line with demand has meant India has become the third-largest importer of the fuel despite sitting on the world's fifth-largest reserves, as per a BP estimate.

Coal India has invited bids from government agencies for supply of imported coal to power plants in India until March 2015, a notice on its website showed on Wednesday. The last date for submission of bids is December 17.

The agencies will import on the company's behalf and sell to customers who have paid upfront, a senior Coal India official told Reuters on condition of anonymity.

"This (fiscal) year I don't think there will be any import required," the official said, referring to the financial year ending on March 31. "But we are finalising it in case there is any requirement."

Coal India must provide 80 percent of the fuel needs of its power customers, using imports if its own output falls short. Coal fuels nearly 60 percent of India's power generation.

The high cost of imported fuels is one of the reasons India's privately held power producers such as Tata Power Co Ltd (NSI:TATAPOWER.NS - News) have struggled to make money.

India, which imported a record 138 million tonnes of coal in the last fiscal year, is expected to remain a big importer due to a lack of reforms in the coal mining sector.

Several coal blocks allocated to companies from 1998 to 2009 are yet to start production, mainly due to dilly-dallying between the federal coal ministry and state governments. Recent court-mandated investigations into the allocations have further delayed mining.

(Reporting by Malini Menon and Krishna N. Das; Editing by Dale Hudson)