New Delhi | March 17, 2016: The ministry of coal has earmarked 16 mines for allocation to states for sale to micro, small and medium enterprises (MSMEs).

This is also a step towards the government's effort to open the coal sector beyond the monopoly of Coal India Ltd.

The 16 mines will be allocated through auction. The list is divided into host state and non-host states (see chart). The states will mine and sell coal to their own industries, mostly MSME's. The effort is also to curb black marketing of coal, which small industries succumb to as there is supply shortfall from Coal India.

The ministry is in the process of designing a mechanism for transparent mining and sale of coal by states. The mechanism would have broad parameters which the states can customise by demand and need. Senior ministry officials said they were in the final lap of designing a model tender process for states to sell mined coal.

"The central government would allot mines and after that, would be in a guiding role. We are hopeful of starting the process by April," said the official.

The earlier blocks allotted to states this year under the new auction mechanism had stipulated end-use and no sale of coal were allowed.

Commercial mining will have strict guidelines. The states would be allowed to engage MDOs (mining developer-cum-operator) through a transparent process but only as a contractor. "The Centre would make sure that no joint ventures with an MDO or change of ownership happens," said a senior ministry official.

The six mineral-rich states are Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Goa and West Bengal.

(Source: http://www.business-standard.com/)