Indonesian coal to get 50% weight in power tariff index

Written by Press Trust of India | New Delhi | Updated: Dec 30 2013, 08:35am hrs
In a significant move, power sector regulator CERC has decided to provide 50% weightage for Indonesian coal in the benchmark index that is used to determine escalation rates for electricity generated using imported dry fuel.

The move would help in having a benchmark in deciding the escalation rates for electricity generated by power plants that are fired by Indonesian coal. It also assumes significance amid deadlock between various power generators and procurers over increasing the electricity tariff due to rise in imported coal prices.

The Central Electricity Regulatory Commission (CERC) has decided to include Indonesian coal, besides South African and Australian dry fuel, in the composite index for imported coal for payment purposes.

Currently for payment purposes, the index takes into account only Australian and South African coal. The Commission said the decision to revise the index has been taken after considering the composition of steam coal imports as well as the importance and acceptability of indices in international contracts.

"The weights of different coal in the composite index shall include 25% Australian coal, 25% South African coal, and 50% Indonesian coal," the Commission said in an order dated December 23.

The CERC has the mandate to notify the escalation rates for imported coal used to fire power plants. These rates are notified every six months. According to the watchdog, 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 2010-11 period, about 73% coal was imported from Indonesia while 24% was from South Africa.