New Delhi: A Parliamentary Committee has expressed unhappiness over allocation of coal blocks to private firms - most of which have failed to develop them - instead of Coal India Ltd (CIL), prompting the government to state that 116 mines will be allotted to the state-owned firm.

"A paradoxical situation is arising in the country wherein the coal blocks are being allocated to private parties most of which are failing to develop coal blocks in stipulated time frame, whereas CIL, is vying with foreign players in international market to acquire coal assets abroad to meet its requirements," said the panel in its report tabled in the Rajya Sabha today.

The remarks of the Parliamentary Standing Committee on Steel and Coal comes at a time when government auditor CAG has estimated undue benefits of Rs 1.86 lakh crore to private firms on account of such allocations and uproar over it refuses to die down.

Coal India and its subsidiaries should be accorded top priority in allocation of identified 138 coal blocks, the panel said. To this, the government has said that it has identified 116 blocks to be given to the PSU.

"The proposal of CIL has been examined in detail by the Ministry of Coal. After examining the revised proposal of CIL, it has been decided to tentatively assign 116 coal blocks to CIL," the government said in its reply.

The Committee said it is of the opinion that CIL, which is the country's biggest coal organisation, responsible for meeting the coal demand of various sectors, "has to play a vital role in ensuring energy security of the country at a time where there has been continuous increase in the sector wise as well as overall demand for coal over the years."

Battling low production, CIL has earmarked Rs 6,000 crore for acquisition of mines overseas and has also formed a subsidiary Coal India Africana Ltd for the such acquisitions.

CIL is the largest coal producer in the world and accounts for over 80 percent of the domestic coal output. It had recorded about 432 million tonne production in 2011-12, as against a revised down target of 447 MT.