RI coal to be included in index determining power tariffs in India

By Romel S. Gurky

India?s power sector regulator Central Electricity Regulatory Commission (CERC) has decided to provide 50 percent weighting for Indonesian coal in the benchmark index used to determine escalation rates for electricity generated using imported dry fuel.

The CERC has decided to include Indonesian coal, aside from South African and Australian dry fuel, in the composite index for imported coal for payment purposes. Currently, the index takes into account only Australian and South African coal.

"The weights of different coal in the composite index shall include 25 percent Australian coal, 25 percent South African coal, and 50 percent Indonesian coal," the CERC said in a December 23 order.

According to the Commission, 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 2010-2011, about 73 percent coal was imported from Indonesia while 24 percent was from South Africa. Average import of steam coal for the last three years shows about 76 percent from Indonesia and 19 per cent from South Africa. During the same period, the dry fuel import from Australia was just about one per cent.

CERC has the mandate to notify the escalation rates for imported coal used to fire power plants. These rates are notified every six months. The new index should be used to determine the escalation rates from April 1, 2014.

Regarding suggestions for country specific indices, CERC said that reliability could be an issue in such cases. "The rationale for using composite index instead of country specific index is to induce efficiency in procurement and diversification of supplies," the order said.

Further, the regulator noted that the composite index would be subject to review and revision "as and when the need arises".

Editing by Reiner Simanjuntak