The government’s proposal to set up an independent regulator for the coal sector is in its final stages, with the coal ministry having completed the groundwork for the initiative.
“The draft note for setting up the coal regulator has been prepared. We have forwarded it to the law ministry now,” said a senior official from the coal ministry.
The ministry had earlier invited suggestions on the coal regulator’s proposal from the ministries concerned.
“All the ministries have given their views. We have incorporated some changes in the note accordingly,” the official added.
According to sources, the final Cabinet note on the proposal would be sent for approval soon. Independent regulation of the coal sector is considered important to ensure competitiveness of e-auction of coal, fixing formulae for price revision for long-term fuel supply agreements, fixing trading margins and increasing transparency in allocation of the available reserves.
While there has been a decline in the quantum of coal sold through e-auction — a majority of which is supplied by Coal India Ltd (CIL) — the prices realised from this process are 20-30 per cent higher than the notified price.
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Setting up a coal regulator would also mean an end to the monopoly of the state-owned CIL to fix and revise prices of the dry fuel in the domestic market.
The Integrated Energy Policy (IEP) finalised by the planning commission recommends “annual” price fixation of the dry fuel as one of the roles of the proposed regulator based on the e-auction price of coal, free-on-board (FoB) price of imported coal and the production cost.