Details

Short notes on National Coal Index (NCI)

National Coal Index (NCI)

Definition & Purpose

- The NCI is a price index that shows how coal prices are changing month-to-month compared with a fixed base year (FY 2017-18). 

- It was developed to give a better market-based mechanism for coal pricing (especially in the context of commercial mining blocks & revenue-share auctions) because older measures (such as the wholesale price index for coal) didn’t reflect the full market.

- The concept and design (including representative prices) were prepared by the Indian Statistical Institute (ISI), Kolkata.

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Coverage & Scope

- The base year is FY 2017-18 (provisional). 

- The index covers all major sales channels for coal:

1. Notified Prices (the fixed/regulatory price set by Coal India Limited/its subsidiaries)

2. Auction Prices (e-auctions and linkage auctions of coal blocks) 

3. Import Prices (unit values of coal imports from specified countries)

- It covers both non-coking and coking coal of various grades, in both regulated sectors (e.g., power, fertilisers) and non-regulated sectors.

- However, certain categories like washed coal (coal products) are not included.

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Structure & Methodology

- The NCI is built as a weighted average of price changes in coal relative to base year. 

- There are five sub-indices categorised by grade-group:

Non-coking top grades (G1-G6)

Non-coking middle grades (G7-G14)

Non-coking bottom grades (G15-G17)

Coking top grades (Steel-I and Steel-II)

Coking bottom grades (Washery-I to IV)

- For each sub-index, weights are assigned to notified, auction and import channels based on value of transactions (quantity x price) in that channel.

Example weights (rounded):

-Non-coking top grade: Notified 38.33%, Auction 11.42%, Import 50.25% 

- Non-coking middle grade: Notified 51.38%, Auction 13.05%, Import 35.56% 

- Coking top grade: Notified 1.04%, Auction 1.12%, Import 97.84% 

- For bottom grades of some categories, the import component may be zero ("XX" in the table) because import data may not exist for those grades. 

- The index is released monthly by the Ministry of Coal. 

- Data collection responsibility lies with the DDG office (within the ministry) coordinating with CIL's marketing division and the Directorate General of Commercial Intelligence & Statistics (DGCIS) for import data.