Under the new regime, the captive block will be allotted to private players for setting up of coal washeries on build-own-operate basis.
The government will soon invite expression of interest (EoI).
Addressing a conference on coal and electricity here on Monday, additional secretary, coal, Lakshmi Chand said, captive blocks will be allotted for setting up washeries an area which is otherwise unattractive for private players due to unassured returns in the private sector.
The efficiency of the sector would be increased by adoption of clean technology, he said adding that the move was aimed at effectively ending the stranglehold of public sector undertakings wherein captive block holders would decide the price of coal.
Mr Chand said as many as 143 blocks had been identified for allotment with total estimated reserves of 30 billion tonne.
Also, the new policy norms would be announced for grading and pricing of coal on the basis of gross calorific value as opposed to the concept of useful heat value (UHV) currently in vogue in the country.
Current legislative requirements permit private sector investment only for limited purpose of setting up washeries and captive mining for specified end uses, including setting up of power plants, fertiliser and steel units.
Minister of state for coal Prahlad Patel said that the government was contemplating introduction of a new Coal and Lignite Bill to enable private sector mining on a commercial basis.
The move was expected to boost coal production in the long-term, Mr Patel said.
He said coal production was expected to double in the next decade with projected demand at 460 million tonne at the end of 10th Plan expected to shoot up to 620 million tonne by 2012.
Investment requirement to meet the accelerated demand had been placed at Rs 19,200 crore, he said.