Govt sets up coal regulator to advise on fixing price

Months after deciding to set up an authority to regulate rail tariff, the government has put in place a similar body for the coal sector, through an executive order. The coal regulator will advise the government on principles and methodologies for price determination, while state-owned Coal India Ltd (CIL) will continue to fix prices, subject to the coal ministry’s approval.

The government had approved the decision to set up a regulator in June last year. The Coal Regulatory Authority (CRA) Bill, introduced in Parliament by the ministry in December, is still pending.

There are proposals for regulatory bodies to govern the roads, biotechnology and real estate sectors as well.

REGULATING COAL

Functions of CRA include advising government on:

• Formulation of principles and methodologies for determination of price of raw coal, washed coal or any other byproduct of washing
• Procedure for automatic coal sampling
• Standards of performance of norms and operational efficiencies, except for the area related to mines safety
• Formulation of policies in coal sector, including allotment or earmarking of coal blocks for any purpose, through any mode, and coal linkage
• Promotion of competition, efficiency and economy in the coal industry
• Development of mining technologies, beneficiation methods to improve mining and conservation of coal resources

Apart from prices, the coal regulator will advise the government on allocation of reserves, procedures for sampling and standards of performance but not venture into matters related to mines safety (domain of the labour ministry) and environmental issues.

It will also advise on “promoting competition, efficiency and economy in the activities of the coal industry; on promotion of investment, development of mining technologies, beneficiation methods and conservation of coal resources”, the ministry said on Wednesday in its official notification of the decision.

The Authority, to be based out of this city, will comprise a chairperson and four members, one each to look after legal, technical, financial and consumer interest-related areas. The members will be selected on the recommendations of a six-member committee, headed by the Cabinet secretary.

Formation of the coal regulator, called “toothless” by experts, also comes at a time when lack of transparency in grant of reserves has led to a controversy over alleged favourable allocations causing a notional loss of Rs 1.86 lakh crore to the government, according to the Comptroller and Auditor General (CAG).

The basic framework of the CRA Bill, 2013, was prepared by a ministerial panel headed by Finance Minister P Chidambaram. The panel, which met five times between July 2012 and May 2013, redrafted an earlier version of the legislation to ensure the regulator’s powers did not overlap with safety laws administered by the labour ministry and environment laws. Pricing power, too, was taken away from the proposed regulator on the argument that coal prices were decontrolled in stages between 1996 and 2000 and denationalisation of the sector was not envisaged. The government, however, decided to ensure the autonomy of the board of CIL, the BSE-listed world’s largest coal miner, was not impacted.

Coal mining is an exclusive domain of the public sector in India. CIL and Singareni Collieries account for 82 per cent of the 557 million tonne annual domestic production. Private companies are allowed to mine coal only for their small captive use. Consumers have blamed CIL of monopolistic behaviour in setting prices and terms of supply, apart from poor quality of coal.