Govt. to notify setting up of regulatory authority through executive order

Seeking to give a big push to sagging coal production and bring competition in the coal sector to ensure efficiency and transparency, the government will go ahead with notifying the setting up of the Coal Regulatory Authority (CRA) through an executive order and will not wait for passage of a Bill in Parliament.

The view in the government is that considering the acrimonious political situation, it would not be feasible to wait for Parliament approval in the monsoon session for setting up the new regulator.

“We would come up with an executive order to set up the coal regulator, like we did with the PFRDA [Pension Fund Regulatory and Development Authority] and in the case of SEBI [Securities and Exchange Board of India],” Finance Minister P. Chidambaram has said.

The Cabinet Committee on Economic Affairs on June 27 approved the proposal for setting up an independent regulatory authority, and introduction of the Coal Regulatory Authority Bill, 2013 before Parliament.

Although state-run Coal India Limited will continue to decide on pricing, the regulator will evolve the guidelines and methodology for the same. While it will have no say in allocation of coal blocks, the CRA will specify methods of testing for declaration of grades or quality of coal, and monitor and enforce closure of mines. A Coal Regulatory Authority Fund will be created and all grants, fee and charges received by the CRA will be credited to it.

Clearing the muck

Global consultancy PwC India says the setting up of the CRA would go a long way in cleaning up the muck that has accumulated in the crucial sector. “This move will help make this sector more competitive, where private participation is growing, and also lead to its de-control,” said PwC India Energy Utilities and Mining leader Kameswara Rao.

Mr. Rao said the CRA would avoid legacy issues, and focus on long-term requirements of pricing principles, grading and sampling, incentives for efficiency and conservation. Hence the lack pricing powers would not undermine its powers.

India’s coal imports have been on the rise, increasing to a record 135 million tonnes in the last fiscal year and are set to grow further. Despite the country sitting on reserves of about 286 billion tonnes, domestic production has failed to keep pace with the demand from utilities, leading to chronic power shortages that have had a crippling effect on economic growth. More than half of the country’s 223.3 gigawatt installed capacity is produced from coal. India’s total coal imports, which include coke and briquettes, apart from thermal and coking coal, stood at 105 million tonnes in 2011-12.