"There is no need for Coal India to be privatised right now. No coal ownership should be transferred to improve production," Prabhu told PTI.
Privatisation of the country's assets should not be seen as the immediate solution to the problem of scanty coal production on part of CIL, he said.
"De-nationalisation of national assets involves political risk," he said, adding that CIL can invite bids from private power companies to excavate coal using their own equipment and the produce will be owned by the coal major.
The coal mining aspect can be outsourced to a private company, Prabhu said. "In this way ownership of both mine and mined coal remains with the government and increases the production without any government investments."
He emphasised that the bids must be invited in a transparent way.
Prabhu served as the country's Power Minister during the Atal Bihari Vajpayee-led NDA (National Democratic Alliance) government.
As per latest estimates by the Central Electricity Authority (CEA), the coal demand for the current financial year (2014-15) is likely to be 567 million tonnes.
In the last financial year (2013-14) the country consumed 498.3 MT of coal against a target of 522 MT as per the power sector planning body CEA's data.
Coal is required to fire about 59 per cent of the country's installed generation capacity of 2.29 lakh MW.
The government has set a target of generating 1,023 billion units of electricity in 2014-15.