New Delhi, Sept. 30: The government has turned its attention to regulatory reforms — and the first on the list is a proposal for a coal regulator, which may be cleared early next month.
Independent regulators for petroleum and aviation are also in the works but will take some time.
The need for an independent coal regulator has long been debated. While Coal India Ltd (CIL) is the sole producer in the country, a large number of firms have been given captive blocks and some have been allowed to trade the surplus output. There have also been complaints of mispricing and abuse of monopoly power by CIL and counter-accusations of the government twisting its arm to favour private buyers.
The Independent Coal Regulatory Authority Bill, 2012, seeks to empower the proposed regulator to decide coal prices. It will also have powers to suspend or cancel licences. The authority will also specify the standards of performance and operational norms for companies.
The coal regulator, to be funded through a Coal Regulatory Authority Fund, will also advise on issues such as the auction of blocks, though the government will have the right to conduct the sales and collect the proceeds.
Some within the group of ministers are in favour of ending CIL’s monopoly. While this is unlikely to be taken up at this stage given the political and legal problems such a move can lead to, the Planning Commission and the Prime Minister’s Office are believed to be in favour of listing some of CIL’s subsidiaries. Listing will mean spinning them off as independent companies and bringing them under public scrutiny.
An inter-ministerial panel, headed by T.L. Sankar, as well as several other inter-government committees on energy not only support an independent regulator for coal but also want free trade of the raw material and eventual dismantling of Coal India’s monopoly.
Another group of ministers, which used to be headed by President Pranab Mukherjee when he was the finance minister, had suggested independent regulators for petroleum and aviation — proposals which may come up later this year.
An independent civil aviation authority is being “actively considered” by the government partly because of demands from aviation firms and partly because of pressures from global safety bodies. The International Civil Aviation Organisation had earlier asked India and other member nations to set up an autonomous body to oversee safety.
At present, the director-general of civil aviation, a civil servant working in close proximity with the ministry, is in charge of safety. The link with the ministry is believed to curb his independence. Besides, the directorate often lacks experts to be able to discharge its duties fully.
The DGCA’s role is restricted only to flight safety; it has no say in economic regulations. A civil aviation authority is expected to be a comprehensive regulatory body, which will look into issues such as consumer grievances and predatory pricing.
The civil aviation ministry has long resisted the creation of an independent regulator, saying the DGCA was sufficient. However, top officials said it had more or less been decided that the regulator should be set up within this calendar year.
On an upstream petroleum regulatory body, officials pointed out that several committees had made recommendations to the government on the proposal, which seeks to transform the directorate-general of hydrocarbons (DGH) — appointed by the petroleum minister — into an independent regulatory body by an act of Parliament.
The DGH decides on crucial issues such as production-sharing contracts for discovered fields and exploration blocks, promotion of investment in exploration and prospecting in the oil and gas sector and performance review of producing fields.
Officials contend that as an appendage to the petroleum ministry, the DGH cannot be considered to be autonomous and its decisions at times may be influenced.
Also, the government is the owner of several oil and gas firms and a conflict of interest will arise if the oil regulator is part of the government machinery.
Though the petroleum ministry is reluctant to let go its control over the DGH, the government is believed to be looking at delinking the two as soon as possible.