Cabinet clears plan to auction coal for non-power sectors

NEW DELHI (Reuters) - The cabinet has cleared a proposal to auction coal to non-power sectors like steel, iron and cement, Coal Secretary Anil Swarup told Reuters, ending the past practice of selective allocation and potentially raising costs for users.

State-controlled Coal India Ltd will put up a quarter of its production for auction to non-power companies following Wednesday's decision by the cabinet, which was chaired by Prime Minister Narendra Modi.

But companies that had long-term fuel contracts with Coal India will continue to get supplies until their term expires.

"The aim is to remove discretion," said Swarup, who has also been instrumental in auctioning coal mines to private companies.

India has launched a round of auctions of mines so that private firms can extract coal for their own use, after the Supreme Court in August 2014 cancelled more than 200 illegal coal block awards made over two decades.

(Reporting by Krishna N. Das; Editing by Sunil Nair)