Ministry of Coal has started Commercial Auction of coal mines on revenue share basis.
- In order to arrive at the revenue share based on market prices of coal, one National Coal Index (NCI) was conceptualized.
- The NCI is a price index which reflects the change of price level of coal on a particular month relative to the fixed base year.
- The base year for the NCI is FY 2017-18. Prices of coal from all the sales channels of coal, including import, as existing today are taken into account for compiling the NCI.
- The amount of revenue share per tonne of coal produced from auctioned blocks would be arrived at using the NCI by means of defined formula.
- NCI is composed of a set of five sub-indices: three for Non Coking Coal and two for Coking Coal. The three sub-indices for Non Coking Coal are combined to arrive at the Index for Non Coking Coal and the two sub-indices for Coking Coal are combined to arrive at the Index for Coking Coal. Thus, indices are separate for Non-coking and Coking Coal. As per the grade of coal pertaining to a mine, the appropriate sub-index is used to arrive at the revenue share.
