The announcement times with the entry of power players Finance Minister P. Chidambaram had a few cryptic announcements to make, while unfurling Budget 2008-09. And one of them was the decision to set up a coal regulator. Though he did not spell it out, the Centre's proposal is timed with the entry of the private players in the coal sector. According to official sources, considerable spadework has been done in the coal ministry (currently under the direct charge of Prime Minister Man-mohan Singh) on the functions of the coal regulator. The Coal Mines Nationalisation Amendment Bill 2000, which has been awaiting parliamentary approval, could be revived soon. Of course, this would depend on how the political situation plays out. That was why Chidambaram did not say anything more on the subject. If the situation had been normal, said a source associated with the developments, "Chidambaram would have set out targets for coal blocks to be auctioned in the coming financial year, just as five ultra mega power projects were announced for the power sector." Given India's dependence of fossil fuels for meeting its energy requirements, coal shortages can lead to acute power crises and derail growth. Even an economic powerhouse like China has recently fallen victim to 'brown-outs' and voltage fluctuations because of coal shortage. The regulator will keep a tab on the functioning of public and private sector companies in the sector. Currently, 94 per cent of coal production comes from government companies and private sector participation is limited to captive mining. But, with the demand for coal set to spiral to 2.34 billion tonnes by 2030, private investments will be crucial to the surge in production. A senior coal ministry official said that, with the entry of private players, the government does not want to create a situation where social security and physical safety issues are neglected, as was the case during the pre-nationalisation era. Mishaps in coal mines were common place. Normally, the other issues the regulator would look into are coal resource management, allocation of coal blocks and their proper utilisation, royalty and grievance of coal consumers. A case for regulation Experts have welcomed the coal regulatory mechanism. "There exist a case for regulation of the coal block regulation process, which needs to be made more objective and transparent," says Dipesh Dipu of PricewaterhouseCoopers. Currently, the coal ministry is vested with several regulatory responsibilities, which could now be transferred to one authority. But experts believe that several outstanding issues will have to be resolved. First, there is the question of the new authority having regulatory oversight on Coal India Ltd (cil), the public sector behemoth, which contributes 85 per cent of coal production in India and has a turnover of almost Rs350 billion. Surely, there is bound to be resistance, if the regulator determines the pricing of coal of such players. The newly formulated coal policy supports the idea of cil charging import-parity prices to unregulated consumers. The regulator's control on the process used for coal block and coal linkage allocation would have to be specified, as would the linkages between the regulators for coal and power (which is dependant on coal as feedstock). Distribution of coal SI is done through rationing, as H there is a perennial shortage of supply of coal, which is likely to become more severe. The government has allowed 100 per cent fdi in captive coal mines for the power, steel and cement sectors. However, private participation in coal mining for merchant sale is still not allowed. However, the captive mining process has not really picked up. Around 90 mines have been allotted to private players, out of the 136 identified by cil. Only 8-10 mines have started production of coal. This is primarily due to the long bureaucratic delays in obtaining clearances and approvals. The total time taken for a mine to start production could be as long as four years. This is the prime reason for almost 90 per cent of the mines allocated not starting production yet. The government can speed up this process by adopting an approach similar to that in place for ensuring financial closure of private sector power projects. That's where the regulator can-play a role.