New Delhi: Aiming to plug loopholes in the coal sector, the government will set up an independent regulator with the task of conserving resources besides charting methodology for fixing prices.
The decision to set up the watchdog, much on the lines of telecom, electricity and finance sectors, through an executive order is not unprecedented.
The government hopes Coal Regulatory Authority Bill, 2013 would be passed in the ensuing session of the Parliament.
"Pending the passage of the Bill, we propose to set up the authority by an executive order. There are precedents for that. The PFRDA was set up by an executive order. It is still under an executive order. SEBI was the first to be set up by an executive order then it became a statutory body," Finance Minister P. Chidambaram said on Friday. Last evening, Cabinet approved setting up of the coal regulatory body.
The regulator, however, would neither have the authority to allocate blocks nor determine the prices of the dry fuel; but would chart out the principles and methodology for fixing coal prices.
The much-awaited regulatory body for the sector, in which PSU Coal India is the dominant player, would specify methods of testing for declaration of grades or quality, monitor and enforce closure of mines, specify principles and methodologies for price determination of raw coal and washed coal.
It would also be entrusted with the job of adjudicating upon disputes between parties and discharge other functions as the government may intend. Power firms have been demanding for setting up a coal regulatory body for a long time. Coal Minister Sriprakash Jaiswal said the main function of regulator would be to bring in transparency in the sector.
"We were waiting for (authority) for a long time. I am happy that the Cabinet has accepted the proposal for setting up of the regulatory authority and hopeful that it (Bill) will be passed in Parliament as early as possible and it would be realised," Jaiswal said. Hailing the proposal, industry chambers said this would make the sector more investment-friendly and encourage more exploration.
Reacting to the development, PHD Chamber President Suman Jyoti Khaitan said, "It is an inspiring move to embark upon issues of price determination, testing quality and monitoring the coal mines which would aid in setting a transparent framework to meet the huge demand and supply gap. It will revive the corporate investments trajectory, he added. "We welcome the move to set up an independent regulator for the coal sector and hope that this would make the sector more investment friendly and encourage more exploration," CII Director General Mr Chandrajit Banerjee said.
"The coal regulator will ensure transparency in pricing, quality and supply of coal," Assocham Secretary General D.S. Rawat said. A Group of Ministers had last month approved the bill for setting up of regulatory authority for the coal sector. Settling the issue of fixing coal prices, the Group of Ministers (GoM) had in May decided that the proposed regulator will not determine fuel rates, a job that will continue to be vested with the producers.