कोयला मंत्रालय Ministry of Coal

The Ministry of Coal (MoC) has developed a National Lignite Index (NLI) for facilitating auction of lignite mines on revenue share basis. In order to arrive at the revenue share based on market prices of Lignite, National Lignite Index (NLI) has been conceptualized. The concept and design of the Index as well as the Base Prices have been developed by the Indian Statistical Institute, Kolkata.  National Lignite Index (NLI) is meant to track price movements of Lignite in the Indian market. The NLI is a price index which reflects the change in price level of lignite on a particular month relative to the fixed base year. The base year for the NLI is chosen as FY 2021-22 as this is the most recent year and commercial transactions have increased from 32.8% in the year 2019-20 to 40.8% in the year 2021-22, and commercial price channel “G17 and below” had no transaction in the year 2019-20. Thus, the latter year may be more appropriate for a forward-looking index.  

In the auction process, the National Lignite Index (NLI) and Base Prices (BP) would play very important role. It is envisaged that the NLI would be used in the auction of lignite mines in the same manner as NCI is used in the auction of coal blocks. Specifically, the quantum of revenue share from an auctioned mine would be linked to the movement of NLI.

Brief Ingredients of NLI and BP: - The National Lignite Index would encompass all transactions of Lignite in the Indian market: -
a.    Various quality grades.
b.    Transactions in captive mode.
c.    Commercial transactions through auctions.
d.    Imports excluded.
Presently there are Twenty (20) Lignite mines of eight (8) companies including Government and private companies. There are two channels for lignite use, first is captive and second is commercial. Majority of Lignite i.e. 65.50% has been used for captive consumption during FY 2017-18 to FY 2021-22. Whereas 34.50% of lignite has been sold during FY 2017-18 to FY 2021-22.  In lignite sector, there are no standardized Price and Grade at present as compared to coal sector. For captive and commercial purpose, all the lignite Mines have their own prices mechanism irrespective of grades and channels. Therefore, there is price discrimination as to the captive and commercial use.  For computation of NLI, monthly sale volumes and sale values from 20 (Twenty) mines, would be separately identified for various ranges of GCV in the captive and commercial transactions through auctions. There are Separate price channels for captive and commercial transactions. 

The Standard Operating Procedure and National Lignite Index (Base 2017-18) for the financial years 2017-18 to 2021-22 and Representative Prices for the same period has been published on the website of Ministry of Coal.