Committee on Natural Resources Allocation called for Creation of National Coal Market

A committee on natural resources allocation on 6 June 2011 called for the creation of a national coal market to ensure greater transparency in the allocation of the dry fuel and reduce the demand-supply mismatch.

The committee pointed out the drawbacks of the existing allocation mechanism for the dry fuel. The committee headed by former Finance Secretary Ashok Chawla recommended establishing a national coal market by creating a platform for commercial trading of coal by suppliers and buyers. The committee suggested use of experience gained through the e-auction platform to create a common one for all buyers and suppliers, including the captive allotees that are permitted to sell.

The committee highlighted that introduction of both captive mining and e-auctions were right steps taken in the direction of moving toward market-based allocation, the committee.
The committee is of the opinion that it should be mandatory for all sales in coal by the permitted entities to be registered with the platform and pay a standard fee, with details of price and mature of contract and grade of coal transacted.

The formation of a platform like the national coal market will facilitate a gradual evolution of established prices and terms of contract. The platform would ensure lower prices of the fossil fuel, since competition from imported coal would always act as an overall check.

The operation of the platform, which would be owned by Coal India and register all approved users, could be regulated by the proposed coal regulator.

According to the committee the current mismatch between supply and demand of coal in India can be attributed to lack of sufficient interfaces between consumers and producers.