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DEC 18 2012

Miners can determine coal prices: Ministry

  • Economic Times, ET Bureau / Hyderabad
  • Created: Tue 18th DEC 2012

Ahead of the second meeting of a ministerial panel to give final shape to the Coal Regulatory Authority Bill on Tuesday, the coal ministry has proposed that coal producers can determine the price of the commodity. However, the proposed coal regulator should decide the methodology to fix prices to check abuse of monopoly by any coal producer, the ministry said.

The coal ministry has also rolled back a crucial proposal to give power of authorisation in grant of leases to the regulator.

State-owned Coal India Ltd (CIL) accounts for about 80 per cent of the domestic coal production of approximately 530 million tonne (mt).

The coal ministry has amended the provisions on price regulation for determining the price of coal on a rational and scientific basis, leaving the responsibility of fixing prices to coal producers.

"The regulator will only specify, with government approval, the principles and methodology for price determination in a more rational manner," sources said.

While the coal prices are theoretically decontrolled, the government continues to sway pricing decisions, a trend that has irked CIL'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 hikes.

Independent regulation of the coal sector is aimed at ensuring competitiveness of market sales, fixing guidelines for price revision and increasing transparency in allocation of reserves. In May, the Union Cabinet had discussed the proposal to set up the coal regulator and asked to set up a Group of Ministers (GoM) to give a final shape to the Coal Regulatory Authority Bill.

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Coal Coal India Limited CIL

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