Miners lobbying against govt proposal to link new coal index to international prices; fear move will dent local coal’s competitiveness

  • India plans to create a national coal index to end state-run Coal India's control over prices and privatise the coal sector, as the energy-hungry nation for the first time looks to invite bids from global firms for coal mining blocks by end-2019

  • A government panel has proposed two price formulas, both of which use prices of imported coal to arrive at a benchmark

  • One of the proposals includes a plan to link the index directly to a foreign counterpart, such indexes in Indonesia and Australia

New Delhi: Indian miners are lobbying against a government proposal to link a new coal index to international prices, documents reviewed by Reuters show, which could delay creation of the index.

India plans to create a national coal index to end state-run Coal India’s control over prices and privatise the coal sector, as the energy-hungry nation for the first time looks to invite bids from global firms for coal mining blocks by end-2019.

 Miners lobbying against govt proposal to link new coal index to international prices; fear move will dent local coal’s competitiveness

Representational Image courtesy: Ratan Lal/101Reporters

A government panel has proposed two price formulas, both of which use prices of imported coal to arrive at a benchmark, government documents reviewed by Reuters showed. One of the proposals includes a plan to link the index directly to a foreign counterpart, such indexes in Indonesia and Australia.

Both proposals would likely hike local coal prices closer to international prices, potentially denting local coal’s competitiveness as it is typically lower-quality.

The index is central to Prime Minister Narendra Modi’s push to attract foreign investment in the coal sector, which could open up trading of coal futures and options.

But the index faces an objection from industry group Federation of Indian Mineral Industries, which counts Rio Tinto’s India unit and India’s Adani Enterprises among members.

It wrote to the government in August arguing against basing prices on imported coal and urged it to instead base prices on Coal India’s fuel supply agreements and e-auctions.

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Updated Date: Oct 10, 2019 15:50:34 IST