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JUL 26 2012

Ministerial panel on coal regulator agrees on pricing authority

  • Economic Times, ET Bureau / Hyderabad
  • Created: Thu 26th JUL 2012

A meeting of the nine-member ministerial panel set up to frame the powers of the proposed regulator for the coal sector remained inconclusive today.

However, a general consensus emerged on the contentious issue of assigning pricing power to the proposed authority. This, if implemented, would deprive state-owned Coal India Ltd (CIL), the near-monopoly producer, of the freedom it currently enjoys in fixing and revising prices of its output.

"Views of different ministries were heard on the draft Bill on constitution of the coal regulatory authority in todays meeting. There were no objections from any quarter on the pricing issue, a senior official told Business Standard.

The Group of Ministers (GoM), headed by home minister P Chidambaram, would meet soon to give final shape to the provisions. The cabinet had in May discussed the proposal for a coal regulator and had asked for a GoM to give final shape to the Bill. The Prime Ministers Office approved the panels constitution in June.

Others on the GoM include coal minister Sri Prakash Jaiswal, power minister Sushilkumar Shinde, environment minister Jayanthi Natarajan, mines minister Dinsha Patel and Planning Commission deputy chairman Montek Singh Ahluwalia.

Independent regulation of the sector is considered important to ensure competitiveness of e-auction sales, fixing guidelines for price revision in supply pacts, fixing trading margins and increasing the transparency in allocation of reserves. CIL supplies a majority of coal sold through spot sales at e-auction. The prices currently being realised at e-auction are 80 per cent higher than the notified one.

Setting up a regulator for monitoring coal resource development was recommended by the Integrated Energy Policy (IEP) framed by former Planning Commission member Kirit Parikh and the T L Shankar committee on coal sector reforms. The Energy Coordination Committee headed by Prime Minister Manmohan Singh had asked the Planning Commission to prepare a paper on the matter. The IEP had recommended annual price fixation, based on the e-auction price, the price of imported coal and the production cost.

Tags

Coal Coal India Limited P Chidambaram Energy Montek Singh Ahluwalia CIL Planning Commission trading margin

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