In order to bring transparency in tainted coal sector of the country, the government has set up coal regulator. The coal regulator will advise the government on principles and methodologies for coal price determination, whereas state-owned Coal India (CIL) will continue to fix prices, subject to the coal ministry’s approval.
The function of the coal regulator includes formulation of principles and methodologies for determination of price of raw coal, washed coal or any other byproduct of washing. Apart from that, the regulator will suggest the government on allocation of reserves, procedures for sampling and standards of performance without venturing in matters relating to mines safety and environmental issues. Further, the coal regulator will give advice regarding development of mining technologies, promoting competition, efficiency and economy in the activities of the coal industry, promotion of investment, beneficiation methods and conservation of coal resources. The regulator will comprise of a chairperson and four members, which will be selected on the recommendations of a six-member committee, headed by the Cabinet secretary.
The need to set up a coal regulator emerged when the lack of transparency in grant of reserves led to a controversy over the alleged favourable allocations causing a notional loss of Rs 1.86 lakh crore to the government. Coal regulator will ensure greater transparency in auctioning the fully explored coal blocks and will also enable the government to allot coal mining licences through competitive bidding. Further, domestic coal production is also expected to increase after the formation of coal regulator. At present, Indian domestic coal demand is around 35 percent higher than domestic supply, resulting into a high deficit of which a huge part is being met by costly imports from overseas countries.