The Central Electricity Regulatory Commission (CERC) proposed to restructure the coal price index followed in the country for making payments by power producers to coal imports.
Currently, for payments for imported coal, CERC uses a composite index that considers Australian and South African coal.
However, the commission wants to use a modified composite index which includes Indonesian coal prices, while computing the escalation rate for imported coal (for payment purposes).
According to CERC, the modified index makes sense as India imports 73 per cent of the total imported coal from Indonesia, while 24 per cent comes from South Africa.
CERC argues that the modified index is linked to international coal prices, as the policy of the Indonesian government requires coal exporters to align export prices to international prices.
The proposed revision is aimed at incorporating the Indonesian coal price index in the overall index and assigning appropriate weights to the other indices in the composite index.
It said this was necessary, as now, coal from Indonesia formed a significant part of steam coal imports into India and price index developers such as Platts were publishing an Indonesian coal price index (Platts-Indo Coal).