A Bill to set up an independent coal sector regulator with the task of conserving resources and charting methodology for price fixing was introduced in the Lok Sabha on Friday.

The Coal Regulatory Authority Bill, 2013 comes amid the sector grappling with multiple woes, including shortfall in production and allegations of irregularities in allocation of mines.

Introduced by Coal Minister Sriprakash Jaiswal, the Bill seeks to put in place the regulatory body for the sector, in which state-run Coal India is the dominant player.

It would specify methods of testing for declaration of grades or quality, monitor and enforce closure of mines, specify principles and methodologies for price determination of raw and washed coal.

The regulator, however, would neither have the authority to allocate blocks nor determine prices of the dry fuel; but would chart out principles and methodology for fixing prices.

It would also be entrusted with the job of adjudicating upon disputes between parties and discharge other functions as the government may intend. Power firms have been demanding for setting up a coal regulatory body for a long time.

As per the Statement of Objects and Reasons, “The Bill provides for creation of a Fund called ‘Coal Regulatory Authority Fund’, whenever all grants, fees, charges received by the authority shall be credited. However, start-up funding will be provided by the Government.”

It also provides that the Appellate Tribunal for Electricity, already established under the Electricity Act, 2003, shall act as Appellate Tribunal for the appeals against the decisions of the Coal Regulatory Authority, by adding one more Technical Member (Coal) in the said Appellate Tribunal.”

The setting up of an independent regulatory body shall help in the regulation and conservation of coal resources besides benefiting stakeholders including coal companies, consuming industries such as power, steel, cement and coal bearing States.

The Integrated Energy Policy brought out by the Planning Commission, Working Group on Coal and the Expert Committee on Road Map for reforms in the Coal sector had recommended for an independent regulator to make India a long-term player in the international market.

It was felt that the coal sector was characterised by a structure of near monopoly producers and regulated by agencies which are either very closely associated with government and the monopoly producers to command consumers full confidence.

The Cabinet in June had given its approval to the proposal for setting up of the regulatory authority.

Earlier, Ministries had expressed divergent views on the draft Bill, prepared on the recommendations of various committees and Cabinet in May 2012 had referred it to the GoM.

The Bill assumes significance amidst a plethora of problems faced by the sector including output shortfall, which is estimated to reach 185.5 million tonne in 2016-17 from 135 MT last fiscal besides charges of irregularities in mines allocation with CAG estimated Rs 1,86 lakh crore presumptive losses to exchequer on account of mines grant without auction.