Steps should also be taken to tap the country's vast hydro power potential, reform the distribution sector and ensure the financial viability of distribution companies, the ministry said.
Fuel shortages can be mitigated by expeditiously granting environment and forest clearances to coal mines.
Capacity addition of thermal power plants has slowed because of staggered domestic coal production, which is mainly due to delays in land acquisition, getting environment and forest approvals, and in the execution of mining leases by states, the ministry said in the 14-page presentation.
The government should also review the cancellation of coal blocks for power projects in advanced stages of implementation, increase domestic production of gas, cap the rise in power tariffs due to a proposed gas price hike and provide financial relief to generation projects that are stranded because they haven't received promised fuel supplies.
Supply of coal from mines for generation of projects in the 13th Plan period (2017-22) should also be finalised.
The ministry also said the country's vast hydro power potential should be tapped.
The government has set a capacity addition target of 10,897 MW for hydro power generation during the 12th Plan period (2012-17), of which 1,559 MW has been achieved so far. In the 11th Plan period, 5,544 MW of hydro capacity were added against a target of 15,627 MW.
"The slippages are mainly due to geological surprises in hydro generation, law and order issues in the concerned states, adverse weather and natural calamities and resultant contractual issues," the ministry said in the presentation.
The hydro sector can get a boost by providing timely environment and forest clearances, improving infrastructure connectivity in states with potential for such projects, such as Arunachal Pradesh, and providing special financial incentives for hydel plants, the ministry said.