Tackling the coal conundrum

Feb 18 2014, 04:09 IST
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SummaryAn independent coal price regulatory committee could be a good step to begin with

In the din over Telangana, all other issues have taken a back-seat in the ongoing session of Parliament, which is also the last session of the 15th Lok Sabha. So it is not surprising that the Standing Committee report on coal pricing and issues relating to coal royalty, presented to both the houses on February 6, has not been talked about much.

While the report clearly indicates that the coal mess is set to continue as the urgency to deal with it has not yielded any result, it has also outlined possible solutions which need to be studied and discussed further for action.

Not that everything that the panel has suggested can be implemented, but in the backdrop of a sectoral governance structure without any regulator and a monopoly (Coal India Ltd) player, the shackles have to be broken gradually, instead of expecting a big-bang change—the ultimate change, though, is restructuring the coal sector by introducing more players, as recommended by the Competition Commission of India recently.

That may take time, but as a step forward to the whole process, the government should start working seriously on the parliamentary panel's recommendations for streamlining the coal-pricing mechanism and the payment of royalty to the coal-producing states.

While it has pushed for the establishment of a coal regulator for taking decisions on coal pricing and other areas—the Cabinet cleared the Bill for this in June last year but it is yet to be brought in Parliament—the whole process can be started by constituting an independent regulatory committee. In any case, in the diluted Coal Regulatory Authority Bill, the regulator has been reined in by restricting its power to merely suggesting price methodologies. This would mean that the ultimate power would still remain with the government.

What the Standing Committee has now suggested is the speedy creation of a full-fledged regulator, or at least the central government constituting a Coal Pricing Regulatory Committee consisting of representatives of coal companies, the Centre, each coal-producing state, coal purchasers, power generation companies and an expert to head the committee.

The original idea of the Planning Commission was the creation of an independent coal regulatory authority with powers to comprehensively handle coal resource development, regulation of extraction, end-use as well as pricing and safety issues.

The new government at the Centre would obviously want to take a fresh look at the powers of the proposed coal regulator but

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