- Easing of participating norms – will lead to the induction of new technology and competition in the sector. Consequently, the economies of coal-bearing states like Jharkhand, Chhattisgarh, Madhya Pradesh, Maharashtra and Odisha will also grow since all the revenue from these auctions will accrue exclusively to them.
- Allowing auction will lead to
- It will lead to introduction of new technology and completion in the sector.
Foreign players will bring investment, technology and best practices to India.
- Opportunity for Investment in Commodity Business.
- where domestic supply falls short of the demand, opening up an opportunity to substitute 135 MT coal imports.
- A transparent and efficient auction process will attract investments, boost competition & benefit consumer
- Immediate visible impacts have been
- In 2014 – Critical stocks with the Power Plant was for only 7 days. Now they have 30 day stock on average.
- From being a heavy importer of coal, India is now 2nd largest producer of coal – at 729 million tonnes (MT) in 2019-20.
Government should try to remove any road blocks in conducting the auction process. For instance, a major issue faced by the bidders is lack of clarity on payment of stamp duty, which differs from one State to other.
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, National Coal Index (NCI) was conceptualized.
What is the NCI?
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.
- Rolled out on 4th June 2020.
The aim is to have an index that will truly reflect the market price of coal.
Benefits:
- For taxation purpose, the Coal Index will be the base indicator.
- For future calculation of upfront amount and intrinsic value of mine, this Index will be helpful.
- For calculation of annual escalation (monthly payment), this index can be basis.
