A ministerial committee headed by Finance Minister P Chidambaram decided to give the power to fix price for the surplus coal produced by captive mines to the proposed coal regulatory authority.
Accordingly, the coal ministry would include a separate clause in the draft Coal Regulatory Authority Bill covering captive mines.
This would enable the proposed regulator to fix price of the coal mined from captive mines of private companies, including Tata Power, Reliance Power and Jindal Steel & Power.
The coal ministry had earlier proposed in its draft “surplus coal policy” that the captive miners should sell surplus output to CIL at a price lower than the cost of production or the notified price. That policy was abandoned later.
According to a government plan, captive mines must be given a reasonable incentive for surplus coal sales, in view of the domestic shortage.
Under the current system, it is mandatory for private companies operating captive coal mines to share surplus production with the nearest Coal India subsidiary at a “transfer price” decided by the government.
Also, captive coal mining companies currently pay royalty at a rate similar to the rate applicable to their nearest Coal India subsidiaries. This is because captive miners do not dispatch coal, the basis for royalty calculation.