The coal sector is likely to get an independent regulator, which will monitor a wide gamut of things, from pricing to functions, as part of the reforms.
The setting up of a coal regulator would mean the end of the monopoly of Coal India Ltd (CIL), the world’s single largest producer of coal, to fix and revise prices of coal in the domestic market.
Sources close to the development said, “The government wants to bring in some major reforms, mainly based on the report submitted by the expert panel last year, which had taken a cue from Parikh’s recommendations. Prime among them would be an independent coal regulator, who will help ensure level playing field between government players and captive block allotees who go into mining, approve coal price revisions, recommend steps for fixing coal prices, functioning of coal companies, ensure increased coal supply to the power sector under commercially-driven long-term fuel supply agreements, regulate terms and conditions of engagement of labour.”
Following the Integrated Energy Policy (IEP), an expert committee led by chairman Kirit S Parikh submitted a report identifying some significant reform measures in the coal sector, as a part of the IEP.These could not be implemented.
Last year an expert panel, appointed by the Prime Minister’s Office led by T L Shankar submitted a report based on recommendations highlighted by the Parikh Committee, which might be the “blueprint” for coal sector reforms.
Besides, the report might also contain possible restructuring in Coal India Ltd, the largest coal producing public sector company in India. “It could explore if the present structure is the optimal or there is a need for change,” the source said.
The Kirti Parikh committee wanted coal price regulation citing that high energy costs eroded competitiveness of many sectors.
The committee had also suggested the import of high grade thermal coal to the tune of 30-40 mt by 2011-12 and called for scaling up the capacity of ports to meet the import requirements.
The IEP report also pointed the lack of a level playing field for central public sector undertakings (PSUs) and private entities engaged in the power sector.
A broad consensus in the UPA government for liberalising the coal sector was formed earlier in order to step up production, but this could not take shape because of stiff opposition from the Left.
However, in a bid to bridge the yawning gap of 230 million tonne by 2012, it looks more likely this time.
The country would require 730 million tonnes of coal by 2011-12 of which CIL is expected to contribute 520 million tonnes.
The government might also look at commercial mining by private companies in order to bridge this demand supply mismatch.
Presently, public sector coal behemoth Coal India Ltd enjoys absolute monopoly over coal sale in the country, private companies are allowed to mine for captive consumption only. Many such reforms will be introduced this season with less opposition expected and the policies would be revised after building broad consensus.
