The Telegraph
Monday , December 24 , 2012
Since 1st March, 1999
CIMA Gallary

Coal cop thrust on reform

New Delhi, Dec. 23: The government will be finalising this week a multi-member, independent coal regulatory authority, which will have the right to grant mining rights and fix the price of coal.

Top finance ministry officials said a group of ministers (GoM), headed by finance minister P. Chidambaram, will meet this week to approve a draft bill on the authority.

The draft, which states “no entity shall undertake mining operations, produce and supply coal… without obtaining authorisation under this act”, will turn the coal regulator into a strong agency with penal powers against whom appeals can only be made in an appellate tribunal and then directly to the Supreme Court.

Officials said inter-ministerial wrangling, in which the coal ministry wanted to dilute some of the powers, had been sorted out in favour of a strong and independent regulator.

The bill also states that coal mining authorisations cannot be directly or indirectly transferred and the end use cannot be changed, a step taken after the coal scam earlier this year where it was found that mining licences were often sold and the end use changed.

According to the bill, “No authorisation holder without the prior approval of the authority, can directly or indirectly assign or transfer the mine or end use project or any part thereof, by sale, lease, exchange …(or) merge the mining activity with any activity of any other entity not related to coal.” It also states any “agreement made in contravention of the provisions shall be void”.

At present, other than Coal India and its subsidiaries, coal mines can only be operated by steel, power and cement plants for captive use. The government allows these firms to take on specialised mining companies as partners but bars them from transferring the mines to any other owner or end-user.

The coal regulator can cancel the authorisations if the rules are not followed; it has the right to impose fines up to Rs 25 crore on miners for violating laws related to issues such as environment and safety, besides imposing daily fines of up to Rs 20 lakh for delays in carrying out its directives.

The regulator will also fix the prices but the “price shall be modified not more than once a year”, unless the prices are raised or decreased according to any adjustment formula approved by the authority.

The chairperson of the coal authority will be a serving or retired bureaucrat with the rank of secretary, while the legal member will be someone qualified to be the judge of a high court. There will also be two more members from finance and administration.

The authority, to be financed from grants, fees and charges from miners, will be assisted by a secretariat and investigating officers.

The regulator will be subject to parliamentary and audit scrutiny and all rules under the act set by them or by the government will have to be placed before Parliament as subordinate legislation.