National Coal Index (NCI)

• The Ministry of Coal has begun the sixth round of auctions for 141 commercial coal mines.
• The tender document states that the Performance Bank Guarantee (PBG) to be submitted for each successfully auctioned coal mine will be revised annually based on the National Coal Index (NCI).

What exactly is the National Coal Index (NCI)?

• The Ministry of Coal has begun a commercial auction of coal mines based on revenue share.
• One National Coal Index (NCI) is conceptualised in order to arrive at the revenue share based on market prices of coal.
• The NCI is a price index that reflects the change in coal price level over a given month in relation to a fixed base year.
• The NCI’s base year is fiscal year 2017-18.
• NCI is a price index that combines coal prices from all sales channels: Notified Prices, Auction Prices, and Import Prices.
• It is published once a month.

NCI Components

• The Indian Statistical Institute, Kolkata, created the Index concept and design, as well as the Representative Prices.
• NCI is made up of five sub-indices: three for non-coking coal and two for coal.
• The three non-coking coal sub-indices are combined to form the Index for Non-Coking Coal, and the two coking coal sub-indices are combined to form the Index for Coking Coal.
• As a result, non-coking and coking coal indices are distinct.
• The appropriate sub-index is used to calculate the revenue share based on the grade of coal associated with a mine.

NCI implementation

• The NCI would use a defined formula to determine the amount of revenue share per tonne of coal produced from auctioned blocks.
• The Index is intended to include all raw coal transactions in the Indian market.
• This includes coking and non-coking of various grades traded in both the regulated (power and fertiliser) and unregulated (other) sectors.
• Coal products and washed coal are not included.

Source: https://coal.nic.in/en/nominated-authority/national-coal-index#:~:text=NCI%20is%20a%20price%20index%20combining%20the%20prices%20of%20coal,by%20means%20of%20defined%20formula.