The policy on utilisation of surplus coal from captive mines is likely by the next month.
The development comes amid reports of sale of surplus coal by some private parties in open market against norms of captive coal block use.
The government will "finalise policies of surplus coal" by "September,2014", a source close to development said.
The source further said that policy would be approved after detailed consultations among ministries.
The coal ministry has begun consultations with other ministries on the policy, two-and-a-half years after the proposal was shelved by the office then Prime Minister Manmohan Singh.
The government had earlier said that it has prepared a draft policy on utilisation of surplus coal from captive mines and was awaiting comments from various departments.
"Government has formulated a draft policy on usage of surplus coal, including middlings, rejects, etc, which has been circulated to various ministries/departments for obtaining their comments," the government informed Parliament last week.
As per the Coal Mines (Nationalisation) Act, 1973, there is no provision of sale of coal from the coal blocks allotted for captive use.
The government had said "as per the conditions in the allocation letter issued to various allocatees of coal blocks, usable middling/rejects generated during beneficiation shall be used captively by the allocatee(s) in their end-use plants specified in allocation letter."
The modalities of disposal of surplus coal would be as per prevailing policy and could also include handing over such coal to the local Coal India subsidiary or to any person designated by it at a transfer price to be determined by the government, the government had added.
It had said that in case of violation of norms of the use of surplus coal, "The government takes appropriate action against the allocattee company including de-allocation of the block."
"In case of Takli Jena Bellora (South Part) coal block allocated to private firm Central Collieries Company for captive use, the sale of coal in open market was reported to the government and it had declared the "mining lease of the said block as void," the government had added.
Earlier, in the backdrop of the Coal Ministry's proposed surplus coal policy, the Power Ministry has said that any excess fuel mined by the private firms from captive blocks should be returned to state-run Coal India.
Earlier, Tata Power had sought government approval for using surplus coal from the Mandakini coal mine for its Maithon thermal power project (Jharkhand) that is