The government of India is planning to set up a fund focused on acquiring coal assets in overseas locations in order to address the problem of shortage of coal supply in the country.

Coal minister Sriprakash Jaiswal pointed out that the state-run Coal India Ltd (CIL) has additional funds for acquiring overseas coal assets but the government should also provide financial assistance for acquiring larger coal assets to addressing the supply issue.

Mr. Jaiswal said, "To address the problem, government is proposing to create a fund on the line of sovereign wealth fund created in some countries."

A shortage in coal supply is affecting power plants as well as other sectors in the country. CIL announced its decision to move from "useful heat value" (UHV) based pricing to (gross calorific value) GCV-based price mechanism from the beginning of 2012. The GCV is a internationally accepted pricing mechanism but the UHV mechanism was used in India to consider heat trapped in ash instead of just the heat released by carbon and hydrogen in the coal when it is heated.

CIL was offering the coal in seven categories until December 31, 2011 and had sad that it will move to a system in which it will offer the fuel in 17 price categories. The types vary from the type producing 2,200 kilo calorie to one that produces 7,000 k cal. Each price band differs with 300 k cal from the previous one under the mechanism.