State miner Coal India Ltd (CIL) is engaged in intense consultations with Bangladesh to export coal to the neighbouring country, the government said on Tuesday.

"We are already into it and they (CIL) are in very deep consultations with Bangladesh for exporting it," Coal Secretary Anil Swarup said inaugurating a coal summit here organised by the India Energy Forum.

He said the development comes against the backdrop of a sharp decline in domestic demand for coal, as well as with an inventory of over 80 million tonnes (MT) of the fuel at Coal India pitheads and at power plants.

"Where would they stock the coal? We had more than 80 MT. Now if your entire production in 500 odd MT and you have 80 MT of stocks, you will have to look at it and that is why CIL did not produce more. Second reason is that in August there were unusual rains, which impacted mining," he said.

Exports to Bangladesh would also help CIL in increasing sales in the context of a deal signed in July by India with Bangladesh to construct a 1,320 MW coal-fired power plant – the biggest project under bilateral cooperation, the secretary added.

On the coal production target, Swarup said the government has not scrapped its target for CIL to produce 1 billion tonnes by 2020, and will decide on reviewing it after 2-3 years.

Asked about subdued demand, he said: "We plan for the future. Our power plants are working at a plant load factor (PLF) of 62 per cent, but in the future we believe this PLF will go to 70 per cent and that is the time when we will have more demand.

"Also additional capacity will be added. So there is no logic in bringing down coal production. What will we do if there is demand in the future?"

Swarup also said the central government’s Ujwal Discom Assurance Yojana (UDAY) debt restructuring scheme for power distribution companies will help improve the financial position of state discoms, which will also have a positive impact on coal demand.

Twenty Indian states and one union territory have given in-principle approval and 16 have already signed up for the scheme, which envisages taking over 75 per cent of discoms’ cumulative debt. States would issue loans against the debt at prevailing market rates. The balance 25 per cent would be issued as sovereign backed bonds by discoms.

The scheme also envisages access to cheaper coal.