NEW DELHI: The government has finalised a policy for auction of contracts to unregulated sectors like steel and cement, and expects to auction 24 million tonne of coal starting first quarter of next fiscal.

The private steel and cement firms will have to indicate their coal requirement and their end-use projects to the before bidding for supply from Coal India. As per the mechanism, approved on Wednesday by the Cabinet Committee on Economic Affairs, separate bidding will be held for cement, iron and steel, aluminium and fertiliser plants.

The current fuel supply contracts of steel and cement companies with Coal India will not be prematurely discontinued.

The government will wait for the contracts to end and then auction them. Most fuel supply contracts of Coal India are set to lapse in 2017. “We will set the auction process moving in the next 7-10 days and expect to begin auction in three months. We expect 24 million tonne of coal to be available for auction to unregulated sectors in the next fiscal,” coal secretary told ET.

“The framework attempts to make in a fair manner to end users.

The proposed auction methodology leads to the price through a market mechanism; it does not seek to maximise revenue,” an official statement said.