A Group of Ministers (GoM) today approved a bill which seeks to set up an independent regulatory authority for the coal sector to address contentious issues such as pricing, supply and quality.
The Coal Regulatory Authority Bill will be sent to the Cabinet within 10 days for its approval.
“We (GoM) had a very successful meeting on both issues of Coal Regulatory Authority Bill and pass-through mechanism for supply of coal. Both the things are ready and hopefully in a week or next 10 days we should be ready to take it to the Cabinet,” Power Minister Jyotiraditya Scindia told reporters after the meeting of GoM, which is headed by Finance Minister P Chidambaram.
Mr. Scindia said some of the major functions of the proposed authority would be related to pricing, quality and supply of coal.
“It (Bill) balances the interest of all stake holders, it protects the interest of all stakeholders and at the same time gives a very judicious balance to the Regulatory Authority to be able to supervise the supply and demand of coal in the country,” he said.
He said that the GoM had achieved closure on pass-through mechanism structure as well, and “Coal and Power Secretaries will now be working on putting together a note for the Cabinet to take both these issues forward.”
Coal Minister Sriprakash Jaiswal said: “The format for Coal Regulatory Authority Bill has been approved and would be forwarded to the Cabinet.”
A pass-through mechanism means that the price charged from electricity distribution companies will absorb the rising cost instead of being cross-subsidised by pooling of or absorbed by the power-generating companies.
Settling the issue of fixing coal prices, the Group of Ministers (GoM) had earlier this month decided that the proposed regulator will not determine fuel rates, a job that will continue to be vested with the producers.
The regulator will be, however, empowered to resolve disputes including those arising out of fuel supply agreements (FSAs).
“There is an agreement that pricing must be left to the producer of coal but the regulator will have power to adjudicate on disputes relating to price, quality, supplies.
All disputes will be adjudicated with the regulator and then there will be an appellate authority,” Mr. Chidambaram had said.
The proposal for setting up an independent regulatory authority for coal sector was submitted for consideration of the Cabinet, which had referred it to the GoM.
An independent regulator for the sector is considered important for fixing guidelines for price revision, improving competitiveness in the e-auctions, setting trading margins and increasing transparency in the allocation of reserves.
The need for an independent regulatory assumes significance in the wake of coal major CIL and NTPC frequently disagreeing on quality of dry-fuel being supplied to power firms.
Both Coal India and the power major had locked horns recently over the issue and the State-run power utility had withheld payments of about Rs. 1,000 crore to CIL subsidiary ECL saying the fuel supplied was of poor quality.
After days of intense stand-off over the quality of fuel with NTPC, CIL, which had cut short the supplies to power major, had recently agreed to resume full supplies.
The GoM includes Environment Minister Jayanthi Natarajan and Planning Commission Deputy Chairman Montek Singh Ahluwalia and Coal Minister Sriprakash Jaiswal.