Coal India, the world's biggest coal miner, moved ahead with plans to acquire mines abroad by beginning the process of forming a subsidiary in South Africa.
The development follows state-run Coal India Ltd (CIL)signing a pact with the Limpopo province of South Africa to identify anddevelop coal mines as the Indian company grapples with an acute coal shortage.
The public sector firm invited bids for appointingconsultants to help it form a wholly-owned subsidiary in Africa, a nationalagency said.
"Coal India intends to select South Africa basedconsultant(s) to assist its venture of formation of a wholly-owned subsidiarycompany," CIL said in the bids document, according to the news agency.
The step comes as India recovers from last week's massivepower outage -- the worst in the history of the country, which runs a peak-hourelectricity shortfall of around 12 per cent.
Last year, the government of Limpopo, the northern provinceof South Africa, approached Coal India to set up a joint venture.
Coal India has earmarked Rs 60 billion ($1.1 billion) foracquisition of mines overseas in this financial year from its cash reserves ofnearly $11 billion.
CIL, which accounts for more than 80 per cent of domesticcoal production, missed its revised 2011-12 production target. It achieved only435.84 metric tonnes as against the targeted 447 metric tonnes.
The demand-supply gap for coal was 161.5 million tonnes inthe last fiscal year to March 2012 and it is expected to be around 114 milliontonnes this year.
CIL has agreed to a government demand that it sign fuelsupply agreements to meet a minimum of 80 per cent of the needs of some 48 newpower projects.
The company will have to pay penalties to electric utilitiesin the event of a shortfall in supply.
It wants to improve coal availability both by increasingdomestic production and also through overseas sources.
Coal India produces more than 80 per cent of India's coal atclose to 500 mines across eight states.
It holds the largest extractable coal reserves in the world,with over 22 billion tonnes, but has struggled to boost output due to failureto get environment and regulatory clearances.
Coal accounts for more than half of India's energy use andconsumption is set to increase as development accelerates in energy-intensivesectors such as steel and cement manufacturing.
