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A ministerial panel headed by Finance Minister P Chidambaram on Wednesday approved setting up of a regulatory authority for the coal sector to bring greater transparency and efficiency in coal mining operations. The panel’s decision comes at a time when the government is parallelly looking at ways to open up coal mining for the private sector. It will now be sent to the Cabinet for approval.
The regulator will not have the power to decide prices of coal in the domestic market and state-owned monopoly player Coal India Ltd (CIL) will continue to enjoy freedom in setting prices. The regulator will have no say in the allocation of coal acreages, too. Lack of transparency in distribution of reserves had recently raised a controversy over allegedly favourable allocations.
“The Group of Ministers (GoM) has approved the draft of the Coal Regulatory Authority Bill. A note for the consideration of the Cabinet will be prepared in around 10 days,” Power Minister Jyotiraditya Scindia said after the fifth meeting of the GoM. The GoM was set up in May last year by the Cabinet.
The latest draft of the Bill says the regulator will decide the methodology for fixing prices to check abuse of monopoly by any producer. Currently, CIL accounts for 82 per cent of the domestic 530 mt coal production. While the coal prices are theoretically decontrolled, the government continues to control pricing decisions, a trend that has irked CIL’s stakeholders.
The panel unanimously favoured keeping CIL board’s autonomy in mind before taking a decision on allocating powers to the regulator. It, however, held that the regulator should have the power to counter the methods and practices of a monopolistic player. The GoM had also suggested that the core functions of the ministry need to be preserved.
The panel had also asked for provisions to ensure regulator does not interfere with laws related to safety in mines and environment. Independent regulation of the sector is aimed at ensuring competitiveness of market sales, fixing guidelines for price revision and increasing transparency in allocation of reserves.
REGULATORY TOOTH
Key provisions of the Bill
- Specify principles and methodologies for determination of price by coal companies
- Specify terms and conditions for grant of mine opening permissions given by the coal controller
- Resolve grievances between coal consumers and producers
- Specify methods of testing for classification of grades and procedure for automatic coal sampling
- Monitor and enforce mine closure plans and adherence to mining plan
- Advisory role
- The authority’s powers will be in addition to and not in derogation of laws and provisions relating to safety and environment
