The composition of the benchmark for the price of imported coal is likely to change with a higher weightage to Indonesia vis-a-vis Australia.

A revised index is likely to bring down coal prices as Indonesia is the largest exporter to India, while Australian coal is more costly than Indonesian coal.

Power sector regulator Central Electricity Regulatory Commission has proposed to review the composite index after almost a decade.

“It has been more than a decade now since the revision in the composite index for imported coal was done in 2013. There have been many developments in international coal markets and the quantum of steam coal imports in India. Availability of credible and reliable coal price indices, which represent steam coal imports, has also improved over the years,” the CERC said.

The composite index is an important tool to ensure the price of imported coal is fair and reasonable. It helps to protect consumers from price volatility and ensures that the cost of imported coal is passed on to consumers in a transparent and equitable manner.

The composite index for imported coal was last revised in 2013 when 50 per cent weightage was ascribed to Indonesian coal prices while South African and Australian coal prices each carried 25 per cent weightage.

The CERC has now proposed to increase the share of Indonesian prices in the composite index to 65 per cent and bring down the weightage of Australian coal prices to 10 per cent.

The power regulator suggested the price indices for 5,000 kcal/kg GAR grade coal, published by Platts and Argus/CoalIndo, should each hold an equal share in the overall weightage of Indonesian coal prices while calculating the composite index.

The CERC has asked stakeholders to submit their feedback on the methodology by June 30.

“These indices represent lower-CV coal, which is more representative for imports into India, and are being used as reference prices for coal contracts,” the CERC said.