Ministerial panel on coal regulator to meet today

A nine-member ministerial panel headed by Finance Minister P Chidambaram will meet on Monday to finalise the draft of a Bill to set up a coal regulator, said a coal ministry official. This is the second meeting of the panel, which had met for the first time in July 2012.

The meeting comes on the backdrop of the ministry’s proposal that pricing power of the commodity should remain with coal producing companies.

The ministry wants the proposed regulator to decide the method for fixing prices to check abuse of monopoly by any producer. Currently, state-owned Coal India Ltd (CIL) accounts for 82 per cent of the domestic 530-million-tonne yearly coal production.

While the coal prices are theoretically de-controlled, the government continues to control pricing decisions, a trend that has irked Coal India’s stakeholders.

The ministry, while acknowledging CIL’s freedom to fix prices, wants to check the current practice of price revisions by CIL in line with wage increases.

The ministerial panel, in its first meeting in July last year, had said the autonomy of CIL board needed to be kept in mind but the regulator should have the power to counter the methods and practices of a monopolistic player. It also suggested the core functions of the ministry need to be preserved.

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. In May 2012, the Cabinet had discussed the proposal to set up a regulator and had asked for setting up a Group of Ministers to give a final shape to the Bill.

Private power producers have raised objections to provisions in the Bill related to cost-plus pricing, which ensures a minimum margin for a developer over the cost incurred.

The draft Bill says the pricing principles to be evolved by the regulator would be guided by safeguarding of consumer interest and, at the same time, recovery of the cost of coal, including a reasonable return to the developer.