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What is National Coal Index (NCI)

Context:

The Ministry of Coal has launched the sixth round of commercial coal mines’ auction for 141 coal mines.

As per the provisions of the tender document, the Performance Bank Guarantee (PBG) to be submitted for each successfully auctioned coal mine is to be revised annually based on the National Coal Index (NCI).

Relevance:

GS II: Indian Economy

Dimensions of the Article:

  1. What is National Coal Index (NCI)?
  2. Components of NCI
  3. Implementation of NCI

What is National Coal Index (NCI)?

  • The National Coal Index (NCI) is a price index established by the Ministry of Coal to determine revenue shares for the commercial auction of coal mines.
  • It is based on market prices of coal and reflects changes in the price level of coal on a particular month relative to the fixed base year of FY 2017-18.
  • The NCI is a composite of prices from all sales channels, including Notified Prices, Auction Prices, and Import Prices and is released every month.
  • The base year for the NCI is FY 2017-18.
  • It is used to arrive at the revenue share based on market prices of coal.

Components of NCI

  • The National Coal Index (NCI) has been developed by the Indian Statistical Institute, Kolkata, and is composed of five sub-indices: three for Non-Coking Coal and two for Coking Coal.
  • Composed of five sub-indices:
    • Three for Non-Coking Coal
    • Two for Coking Coal
  • Sub-indices used to calculate separate indices for:
    • Non-coking Coal
    • Coking Coal
  • Based on the grade of coal from a mine, the appropriate sub-index is used to determine the revenue share.

Implementation of National Coal Index (NCI)

  • Revenue share per tonne of coal produced from auctioned blocks will be calculated using NCI through a defined formula
  • The Index covers all transactions of raw coal in the Indian market including coking and non-coking of various grades transacted in the regulated (power and fertilizer) and non-regulated sectors
  • Washed coal and coal products are not included in the Index.

-Source: The Hindu


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