Coal regulator good, competition better

There is notable movement on the coal front. The Cabinet’s green signal for setting up an independent regulatory authority for the coal sector actualises a long-pending requirement for modernisation, although in tandem, we need to overhaul market design and do away with the anachronistic public-sector monopoly in coal to shore up efficiencies right across the board.


The proposed regulatory body would be required to monitor the quality, grading and supply of coal, and so, should bring about much-needed transparency in what is our main source of commercial energy.

And the fact of the matter is that there is a growing shortage of domestic coal never mind our large, proven reserves. Reportedly, the regulator would not actually determine the pricing of coal, but would be empowered to resolve disputes, including those involving supply agreements with consumers.

It does make sense to keep pricing — administered topdown, as it were — out, because it would be a throwback to perverse, pre-reform controls, in which the now-defunct Bureau of Industrial Costs and Prices pored over the figures to now and again inefficiently work out coal prices.

Instead, we need to avoid rigidities with proactive policy to determine efficiency prices in coal, with multiple producers gainfully seeking custom and, in the process, improving productivity and efficacy in prospecting, mining and evacuation.

Also envisaged is an appellate authority to adjudicate on pricing and other matters. The new regulatory body needs to mandate comprehensive coal beneficiation at the pithead, to boost calorific value and stamp out delivery of poor-quality coal. Water-guzzling coal washeries must give way to greener technologies of dry beneficiation.