Power sector regulator CERC has decided to provide 50% weightage for Indonesian coal in the benchmark index that is used to determine escalation rates for electricity generated using imported dry fuel.
The move would help in having a benchmark in deciding the escalation rates for electricity generated by power plants that are fired by Indonesian coal.
It also assumes significance amid deadlock between various power generators and procurers over increasing the electricity tariff due to rise in imported coal prices.
The Central Electricity Regulatory Commission has decided to include Indonesian coal, besides South African and Australian dry fuel, in the composite index for imported coal for payment purposes.
Currently, for payment purposes, the index takes into account only Australian and South African coal.
The Commission said that the decision to revise the index has been taken after considering the composition of steam coal imports as well as the importance and acceptability of indices in international contracts.
The Commission said in an order dated December 23rd that "The weights of different coal in the composite index shall include 25% Australian coal, 25% South African coal and 50% Indonesian coal."
CERC has the mandate to notify the escalation rates for imported coal used to fire power plants. These rates are notified every 6 months.
According to the watchdog, Indonesian coal has been included in the index considering that it makes up for a pre dominant share of steam coal imports into the country.
In 2010 to 2011, period about 73% coal was imported from Indonesia while 24% was from South Africa.
Average import of steam coal for the last 3 years shows about 76% from Indonesia and 19% from South Africa.
During the same period, the dry fuel import from Australia was just about one per cent.
The Commission said that despite insignificant steam coal imports from Australia, it would have 25 per the Commission said in an order dated December 23rd weightage in the index.
Thr soiurb said that Australian coal has been retained in the composite index despite very low volume of consumption in India due to its liquidity, acceptability for contracts, and possibility of increased use of Australian coal in future."
The new index should be used to determine the escalation rates from April 1st 2014.
Source: Business Standard
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