In a move which would have wide ramifications for the coal sector, the government proposes to liberalise allotment of captive blocks for private participation, enabling mining companies to sell coal and ending the monopoly of the public sector.

The move, once implemented, would bypass the need for introducing amendments to Coal Mines Nationalisation Act which prohibits private companies from undertaking coal mining except for captive purposes.

An in-principle decision has already been taken by coal ministry to permit allotment of captive blocks for washing purposes.

The companies would be permitted to offload the same in the market, official sources said.

The move is aimed at not only introducing competition in the sector but also enabling the government to overcome stiff opposition from labour unions who have resisted attempts to introduce amendments to law.

Coal ministry has already obtained legal opinion from the Attorney General favouring such a move which can be implemented merely by an administrative order. The ministry is currently working out the modalities for the same, the sources said.

The demand for washed coal is excepted to come from private power producers like BSES and Tata Power following an environment ministry order mandating the use of low ash coal in plants located in ecologically fragile areas.