In a bid to open up its domestic coal sector and to overcome the acute shortage of coal in core sectors such as steel, cement and power utilities, India has started auctioning several of its coal blocks through a competitive bidding process.

This comes after the promulgation of the Coal Mines (Special Provisions) Bill 2014 for the management and reallocation of coal mines following a Supreme Court order, which last year, declared 204 coal blocks illegally allocated. This had forced the government to adopt the auction route for the allocation of coal blocks.

The auction, which began on December 25, will see a total of 24 coal blocks being auctioned off to qualified bidders. Of 24 mines proposed to be auctioned, seven are for the power sector, 16 for other end use plants of iron & steel, cement and CPPs and one mine for the steel sector.

The first phase of allocating coal block resources saw five coal blocks put up for auction. The blocks were offered to two user segments, namely one where end-use prices are unregulated, and one where prices are regulated.

The auction of the coal resources for qualified bidders will be held between February 14 and February 22 .The entire mine allocation process for Schedule II (producing) coal mines will be completed by March 23, 2015 with the signing of Coal Mine Development & Production Agreement and the Vesting Order.

The second phase of auction for 32 Schedule III (ready to produce) coal mines will start soon.