The government today said it has notified rules for allocation of coal blocks through competitive bidding process in order to bring transparency in allotment.
The auction will be done by the Centre after fixing a minimum price for blocks on offer.
"In exercise of the powers conferred by the Mines and Minerals [Development and Regulation] Act, 1957, the Central Government hereby makes the following Rules... Auction by Competitive Bidding of Coal," the Coal Ministry said.
Describing the procedure for allocation, it said the offers will be invited "through auction from the companies engaged in the business of specified end-users" and they will be required to submit technical and commercial bids.
On allocation of blocks to government companies, it said that the Centre will identify areas and fix a reserve price.
The ministry said it will circulate to states and the Power Ministry a list of areas containing coal for inviting application from eligible government companies for allocation of blocks.
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"The state governments shall select a company or corporation on the basis of competitive bids for tariff and recommend for allocation of area containing coal to such company or corporation," it added.
Coal blocks are currently offered to the end-users on a preferential basis by an inter-ministerial screening committee.
Coal Minister Sriprakash Jaiswal had recently said that the process of identification of coal blocks going for bidding in the first round has been almost completed.
The Coal Ministry, last year had sought suggestions from stakeholders on draft guidelines on competitive bidding.
Though the exact number of coal blocks that will be put on auction is not known, it is believed that the government is ready with over 50 blocks.
The proposal for auctioning coal blocks through competitive bidding was mooted for the first time about three years ago. Parliament had also approved amending the MMDR Act to facilitate this process.
The need for competitive bidding route was being felt in the wake of slow progress in mining operations in coal blocks.
Coal Minister Jaiswal had said that 216 blocks with geological reserve of 50 million tonne allocated to various public and private companies could contribute valuable coal resources but progress in most of the blocks was not encouraging.