Coal Ministry has proposed to set up a Coal Trade Exchange (CTE) that will act as a competitive market for buying and selling the critical commodity with the Coal Controller Organisation (COO) acting as the regulator.
“Ministry of Coal proposes to empower the CCO as the regulator for the CTE to be established in the country. Legislative support is required for setting up of the Exchange, and providing for the Ministry of Coal to oversee and regulate the Exchange operations and issue the related Rules,” the Ministry said.
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Rationale
With the increased availability of domestic coal in the country, the Ministry said it is envisaged that there would be a paradigm shift towards a surplus coal scenario and resultantly the coal sales scenario is expected to undergo a major change from the existing mechanisms of coal sales channels, necessitating a major market reform backed by a regulatory mechanism.
“Therefore, in the scenario of increased availability of domestic coal in the country, there is a necessity to introduce further reforms in the coal sector with focus on promoting competitive markets for sale of coal, it added.
“The current coal sales channels in the country are specific to the Government owned coal companies (CIL & SCCL). A need is therefore felt to provide a platform i.e. CTE, to also allow commercial/ captive miners (for surplus coal) a ready access to market their produce,” it emphasised.
The exchange will facilitate trading of coal as a commodity and is envisaged to lead to a ‘many-to-many’ platform where both buyers and sellers can bid simultaneously, thereby, making price discovery of coal more efficient and competitive.
“The CTE would lead to a paradigm shift by transforming the coal sales model in the country from a ‘One-to-Many’ model to ‘Many-to-Many’ model. Besides, it is envisaged that the CTE shall provide for clearing and settlement systems where the Exchange shall act as a counter-party,” Coal Ministry said.
Amendments
The Ministry has proposed to amend the Mines and Minerals (Development & Regulations) Act, 1957 by inserting the definition of ‘Coal Trading Exchange’ and for framing of rules by the central government for the regulation of coal trading and coal market.
The proposed amendments in the MMDR Act shall pave the way for notification of rules by the Ministry to provide for licensing/ authorisation of exchange operations and empowering the CCO as coal regulator for guiding the Exchange operations; regulation of CTE by the CCO and formulation of bye-laws by the Exchange Operator.
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The prospective Exchange operators can apply under these rules and get authorisation from the Coal Controller for setting up of an Exchange.
The operations of the CTE would broadly be guided by the regulations made by the CCO. Post authorisation, the exchange operator would subsequently set up and operationalise the exchange along with issuing of market rules and bye laws.
