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Govt Index to Show Revenue of Coal Block Operators

The decision will rule out potential disputes over possible under-reporting of revenues by operators, which, the government feels, cannot be audited regularly.

, ET Bureau|
Aug 13, 2019, 06.46 AM IST
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KOLKATA: The government will use its own coal price index to calculate revenue earned by operators of coal black to ascertain its share of income from 27 blocks being auctioned to the non-regulated sector.

The decision will rule out potential disputes over possible under-reporting of revenues by operators, which, the government feels, cannot be audited regularly. Payments by operators are likely to be made on monthly basis and the government has released that keeping a tab on the price/revenue may not be feasible on a regular basis.

Winners of the current auction will be selected on the basis of the highest share of revenue offered to the government.

Block operators will be allowed to sell 25% of their produce in the open market, but the revenue for calculating the government’s share will be calculated with the help of an index that was recently prepared with help from the Indian Statistical Institute.

In order to reflect market price, the index will be weighted average price for coal available from different sources including Coal India’s notified prices, winning prices under forward, special & spot e-auction for different subsidiaries, international coal prices and prices of coal sold by private and public sector entities. Quantities sold under these heads would be the weights, or the relative importance of these sources in the index. For international coal prices, quantity imported into India would be its weights.

According to an executive from a private power company, who attended a recent meeting on finalisation of the coal price index, weights would be average quantity traded for each category over three-four years and once arrived at, will be frozen for three years, after which it may be reviewed depending on changes in traded quantities under each source. During these blocks of three year period, the index will track changes in prices for different sources only.

“While the formula and the initial weights for each source will be calculated by the Indian Statistical Institute, the index is likely to be computed on a regular basis by the Coal Controllers Office or the Nominated Authority at the ministry of coal,” he said.
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