Proposed coal regulator may get power to fix prices

Seeking to restrict state-run Coal India Limited's (CIL) say in determining price pooling of imported and domestic coal, which has become a thorny issue between CIL and the domestic power industry, a Group of Ministers (GoM) has suggested that the proposed coal regulator must be empowered to devise the pooling mechanism in a transparent way.

In its meeting on July 25, the GoM on coal regulator headed by finance minister P Chidambaram discussed at length on ways to address the issue of price pooling being vociferously demanded by home-grown electricity producers, who are sandwiched between sky-rocketing coal prices and paucity of the fuel's supply form state-run coal companies.

The meeting agreed that the proposed regulator must be equipped to determine a mechanism on price pooling. This, the inter-ministerial panel said, is imperative as the power to fix prices should not be available to the producer (especially a monopoly producer) but rather by an independent authority.

"However, it was also observed that while re-defining the role of the regulator in a monopoly pricing set up, the role and autonomy of the CIL's board need to be kept in mind since coal pricing is a critical input for the economic growth.

The meeting reasoned that since the coal sector is predominantly nationalised, about 90 per cent coal is produced by state-owned companies and the remaining 10 per cent come from captive mines.

While re-defining the role of the regulator, the GoM observed that the basic core functions of the coal ministry are preserved as to avoid overlap as potential conflict from past experience of working of regulators in some sectors has brought out so far.

The ministerial panel concurred that the primary functions of the regulator is to oversee the compliance with the mining plans and to put in place regulations that will be a counter to the practices and methods of a monopolistic producer such as CIL.

... contd.

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