Coal India, the world's biggest coal miner, saw its shares hit their highest level in nearly three years after Reuters reported that Narendra Modi was exploring breaking up the company and opening up the sector.
Modi will be sworn in as the prime minister on May 26.
Coal India shares were among the top gainers on the Nifty, rising as much as 8.22 per cent in early trade to Rs 401.40, the highest since August 2011.
Coal generates more than half of the country's power and is the cheapest form of energy.
Modi wants to fix the inefficient coal sector quickly to improve electricity supply across the country.
Sources said any reform will begin with Coal India, which accounts for 80 per cent of India's total coal output but has failed to meet its output targets for years.
Red tape, strikes, protests against land acquisition and delays in obtaining environmental approvals have kept coal output far below demand, making India the world's No.3 importer even though it sits on the fifth-largest reserves.
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