Cabinet approves Revised SHAKTI policy for coal allocation to power sector

The Cabinet Committee on Economic Affairs (CCEA) today approved a proposal under the Revised SHAKTI policy to make more coal available to thermal power plants belonging to the central sector and state sector, and Independent Power Producers (IPPs).

 

The SHAKTI (Scheme for Harnessing Scheme for Harnessing and Allocating Koyala Transparently in India) policy was launched in 2018 to provide coal to stressed power units which lack coal supply.

 

According to the Revised SHAKTI policy, the government has proposed two new coal linkage windows:

  Window-I: Coal linkage at notified price for central and state power plants

 

Under this window, the existing mechanism for allocating coal to central sector thermal power projects (TPPs), including Joint Ventures (JVs) and their subsidiaries, will continue. Additionally, coal linkages will be designated for states and authorised agencies representing groups of states, based on recommendations from the Ministry of Power.

 

Window-II: Coal linkage at a premium above the notified price for all gencos

 

This window will offer coal linkages to all generating companies (gencos) at a price higher than the notified rate. Domestic coal-based power producers—whether they have Power Purchase Agreements (PPAs) or operate on an untied basis—as well as imported coal-based plants, can obtain coal through auctions by paying a premium over the notified price. These auctions will allow procurement for periods ranging from up to 12 months to as long as 25 years. The policy also gives these plants the freedom to sell electricity at their discretion.

 

Implementation strategy 

Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) will be directed to implement the provisions of the Revised SHAKTI policy. Additionally, relevant ministries, state governments, and regulatory authorities will be informed for better coordination.

 

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Possible impact of Revised SHAKTI policy

 

>Revised SHAKTI Policy shall enable the power plants to plan for meeting their coal requirement depending upon their demand for long term or short term.

 

>Central sector thermal power projects shall continue to get coal linkage on nomination basis on the recommendation of the Ministry of Power.

 

>Requirement of PPA removed for coal under Window-II of SHAKTI policy. Power plants will now have the flexibility to sell electricity freely as per their choice.

 

>Imported Coal Based (ICB) plants can secure domestic coal under Window-II, subject to the technical constraints of ICB plants, thereby reducing their import coal dependency.

 

Strap: The government has proposed two new coal linkage windows under the Revised SHAKTI policy – one at notified price for central and state power plants and other at a premium above the notified price