Coal regulatory authority: When will it see the light of day?  

March 17, 2010

India has the fourth-largest coal reserves in the world. It also plans huge power expansions in the coming years, which need to be fuelled by coal. However, the country still does not have a coal regulator. The Indian government has mooted the idea of setting up a coal regulator twice in previous Budgets. It was proposed for the first time in 2008, but the idea died a silent death for reasons unknown. The 2010-11 Budget also mentions the need to set up a coal regulator. Will this become a reality?

Experts believe that this time, a coal regulatory authority may become a reality with the increasing pressure from both the steel and power ministries for setting up such an entity. Both the steel and power sectors in India have been growing rapidly and huge expansions have been planned in the coming years. Coal is a vital raw material for both the steel and power sectors. Private power companies are facing domestic coal acquisition issues, and are falling back on coal imports.

“This time the Bill should be passed because it has been given a thrust by the power and steel ministries. If not now, the Bill should be passed in the winter session (of Parliament),” said Shashikant Hegde, director and chief executive officer, Economic Research India Ltd.

In his Budget speech for FY09, erstwhile finance minister P Chidambaram proposed the setting up of a coal regulator. Similarly, Pranab Mukherjee, the current finance minister, spelt out the same plan for setting up of a coal regulator in his Budget speech for FY11. “A ‘Coal Regulatory Authority’ to create a level playing field in the coal sector is proposed to be set up,” is what the current Budget says.

In August 2008, a media report stated that a Bill for setting up of a coal regulator would be presented for Cabinet approval in the winter session of Parliament. But that did not happen.

The idea of setting up the regulator resurfaced in June 2009, with the coal ministry planning to set up the authority within 100 days. "We’ve already begun the process and this will be institutionalised within the next three months," Union coal minister Sriprakash Jaiswal was quoted as saying in a media report. But there was no update on the proposal after that.

Just a couple of days before the Budget, Mr Jaiswal told the media, “The regulator will be in place by 15^th March.” Nothing has happened so far.

A lot has been lost due to the delay in setting up of the coal regulatory authority. “The setting up of the authority two years back would have helped. The coal needs of at least half a dozen coal-based power projects could have been addressed,” said Mr Hegde.

Meanwhile, coal blocks allotted to private players dating back from 2008 still await final clearances and various other issues which have resulted in a delay of critical mining activities. — Amritha Pillay