Governance
National Coal Index
- 12 Feb 2021
- 3 min read
Why in News
Recently, the Ministry of Coal has started commercial auction of coal mines on a revenue share basis using the National Coal Index (NCI).
- NCI was rolled out in June 2020.
Key Points
- About:
- It is a price index which reflects the change of price level of coal in a particular month relative to the fixed base year.
- The base year for the NCI is Financial Year 2017-18.
- It is a price index which reflects the change of price level of coal in a particular month relative to the fixed base year.
- Compilation:
- Prices of coal from all the sales channels of coal, including import, as existing today are taken into account for compiling the NCI.
- The amount of revenue share per tonne of coal produced from auctioned blocks would be arrived at using the NCI by means of defined formula.
- Sub-Indices: NCI is composed of a set of five sub-indices:
- Three for Non Coking Coal and two for Coking Coal.
- The three sub-indices for Non Coking Coal are combined to arrive at the Index for Non Coking Coal and the two sub-indices for Coking Coal are combined to arrive at the Index for Coking Coal.
- Thus, indices are separate for Non Coking and Coking Coal.
- As per the grade of coal pertaining to a mine, the appropriate sub-index is used to arrive at the revenue share.
Coal
- Coal is the most abundant fossil fuel which holds 55% of India's energy need.
- Based on the uses, coal is divided into two types:
- Coking Coal:
- This type of coal when subjected to high temperature carbonisation i.e. heating in the absence of air to a temperature above 600 degree Celsius, forms a solid porous residue called coke.
- Coke is fed into a blast furnace along with iron ore and limestone to produce steel in steel plants.
- Coking coal is desired to be of low ash percentage.
- Use:
- Mainly used in steel making and metallurgical industries.
- Also used for hard coke manufacturing.
- This type of coal when subjected to high temperature carbonisation i.e. heating in the absence of air to a temperature above 600 degree Celsius, forms a solid porous residue called coke.
- Non Coking Coal:
- These are coals without coking properties.
- Use:
- This is the coal used in thermal power plants to generate electricity, so it is also known as steam coal or thermal coal.
- Also used for cement, fertilizer, glass, ceramic, paper, chemical and brick manufacturing, and for other heating purposes.
- Coking Coal:
- Coal is also classified into four ranks: anthracite, bituminous, subbituminous, and lignite. The ranking depends on the types and amounts of carbon the coal contains and on the amount of heat energy the coal can produce.
