CERC sources told FE that the annual inflation rates and escalation rates for bid evaluation have been computed based on the time series data for latest 12 calendar years (1997-2008).
The dollar rupee exchange variation rate of 0.11% has been computed based on the data for the period between 1998 and 2008 keeping volatility of the dollar with the rupee. A mean approach has been applied on the data series. Further, to smoothen out the data series, the annual escalation factors have been calculated on data points obtained using a three years moving average on annual calendar year data.
The escalation rate for domestic rate for domestic coal for 2000 was 2.95%, 8.76% in 2001, 7.84% in 2002, 7.98% in 2003, 6.61% in 2004, 8.29% in 2005, 6.28% in 2006, 2.36% in 2007 and 3.03% in 2008. The mean escalation rate of 6.12% was notified as escalation rate for domestic coal upto March 31, 2010.
Moreover, the escalation rate for domestic gas has been computed based on the time series data on consumer price
of gas for the period from 1997 to 2008.
The data has been collected from the petroleum ministry and GAIL India. Hybrid index based on 90% weightage to consumer price off shore (landfall point and on shore) and 10% consumer price (north eastern states) has been used while computing the escalation rate of 1.31% for domestic gas.