The Union Government is framing guidelines and rules for the proposed competitive bidding for auction of coal blocks.
"We are currently framing and drafting guidelines for auction of coal blocks and we hope to complete and begin the auction process in the next three to four months," coal secretary C Balakrishnan said.
Parliament in August passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2010, which paved the way for introduction of auction through competitive bidding for allocation of coal blocks to private companies for captive use.
To encourage greater transparency, the bill seeks to replace coal block allocation done by a government screening panel with allocation of coal blocks through auction.
At present, an inter-ministerial screening committee, which includes representatives from concerned state governments, allocates coal blocks to private firms engaged in generation of power, production of iron and steel, and some coal washeries.
Coal India, which is the country's largest coal miner, does not intend to participate in the forthcoming bidding and instead seeks preferential allotment to some blocks.
The country's coal demand in 2010-11, which is now pegged at 656.31 million tonnes, is projected to rise to two billion tonnes per annum by 2031-32.
Trade union leader R C Singh affiliated to CPI alleged sometime back that private sector companies had been sitting tight on 138 blocks of coal and that no one knew when they would start operation.
Several companies, which have no link with the power or steel sector, have also been allotted the blocks, he alleged.
Concerns were also expressed in several quarters for the degradation of environment and forests, as private companies which bagged the coal leases through auction, are likely to go for open cast mining.