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Govt sets up coal regulator to advise on fixing price

The coal regulator will advise the government on principles and methodologies for price determination, while Coal India will continue to fix prices, subject to coal ministry’s approval

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.

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 in its official notification of the decision.

The Authority 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.

Coal India hikes price of certain grade of coal

State-owned Coal India (CIL) has increased the price of a certain grade of coal from one of its mines in Godda district of Jharkhand. The increase has been with effect from April 1 as per the decision taken by the Coal India board, sources said.

“The CIL board in its 306th meeting held on March 20, 2014 has approved fixation of add-on price in respect of coal produced from Rajmahal mine of Eastern Coalfields Ltd at Rs 390 per tonne in place of existing Rs 300 per tonne.

“This is in order to rationalise the price of coal produced from Rajmahal mine of Eastern Coalfields due to reclassification of Grade of Rajmahal mine of Eastern Coalfields Ltd and price adjustment,” according to a CIL Official.

Coal India had in December last year hiked prices of non-coking coal produced by its subsidiary Western Coalfields by 10%. “Last time, during rationalisation in the end of February 2011, there was a substantial cut. In the process, it had some impact. So, now we have increased it by 10% on WCL (Western Coalfields),” Coal India CMD S Narsing Rao had said earlier.

On account of increase, Western Coalfields will earn an additional revenue of Rs 139.84 crore for 2013-14, CIL had said in a filing to BSE.

Minister of State for Coal, Pratik Prakashbapu Patil, had said in a written reply to Lok Sabha in December 2013 that Coal India Ltd may get an additional revenue of Rs 2,119 crore in FY’14 on account of revision in dry fuel prices.

CIL had revised the prices of all grades of coal, barring three, for all its eight producing subsidiaries with effect from May 28, 2013.

CIL accounts for over 80% of the domestic coal production.

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