NEW DELHI, June 5 India's proposed coal regulator will provide a framework for pricing while state-run miner Coal India Ltd will retain the right to set prices, Coal Secretary S.K. Srivastava told Reuters on Wednesday.
"The regulator will work out the principles and methodologies upon which pricing will be done. But the actual fixing of the prices of coal will be done by Coal India," Srivastava said.
Coal India last week raised prices of its low-grade coal by 10 percent while lowering the price of higher grade coal by 12 percent.
It said the changes would bolster its revenue by about 21.19 billion Indian rupees ($373 million) for fiscal 2013/14 which began in April.
India aims to set up a coal regulator to improve supplies and weed out corruption in a sector that is the main source of energy for Asia's third-largest economy.
A draft bill is due to be submitted to cabinet on Friday. Already recommended by a group of ministers, it must now be approved by cabinet and parliament.
The regulator will look into issues including those related to grade and quality, Srivastava said.
"If there is any dispute, then there are two ways of addressing it. One is through the FSA (fuel supply agreement) arbitration clause or the two parties can go to the regulator directly, also with regard to pricing," he said.
India holds the world's fifth-largest reserves of coal and the world's biggest coal miner, Coal India.
Yet the country still suffers massive power cuts due to supply bottlenecks and the poor quality of coal delivered to power plants.
State-run power producer NTPC has long complained that it is forced to accept poor quality coal from Coal India which crimps its output and keeps the country reliant on costly imports.
The two companies are holding discussions to reach an amicable solution, Srivastava said.
"Things are moving.... There is communication between the two companies towards a resolution," he said.
($1 = 56.7725 Indian rupees) (Editing by Jason Neely)