In a move aimed at enhancing coal availability and flexibility for the power sector, the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved fresh coal linkages under the revised ‘SHAKTI’ (Scheme for Harnessing and Allocating Koyala Transparently in India) policy.
According to an official statement, the revised policy simplifies coal allocation through two mechanisms—Window-I and Window-II—streamlining the existing eight allocation categories to promote ease of doing business.
Under Window-I, coal linkages will continue to be granted at notified prices to Central and State Government-owned thermal power projects, including joint ventures and subsidiaries. States may use these linkages for their own generating companies or Independent Power Producers (IPPs) selected through Tariff-Based Competitive Bidding (TBCB) or with existing Power Purchase Agreements (PPAs) under Section 62 of the Electricity Act.
Window-II allows all thermal power producers—including domestic coal-based and imported coal-based plants—to acquire coal through auctions at a premium above the notified price. These linkages will be available for durations ranging from 12 months to 25 years, and power generated using such coal can be sold without the requirement of a PPA, offering producers greater market flexibility.
Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) will be directed to implement the revised policy, and all relevant ministries, state governments, and regulatory bodies will be informed for further dissemination.
The revised SHAKTI policy is expected to encourage new capacity additions—both brownfield and greenfield—particularly near coal pitheads, improve long-term planning for coal procurement, and reduce dependence on imported coal. Imported Coal-Based (ICB) power plants will now also be able to access domestic coal under Window-II, subject to technical feasibility, with benefits passed on to consumers as determined by regulatory commissions.
By doing away with the mandatory PPA clause for coal allocation under Window-II, the policy seeks to attract more private investment in the thermal power sector and support the government’s broader energy security and affordability goals.
With an aim to reduce the ‘landed cost’ of coal at the thermal power plant end, coal source rationalisation will be done. This will not only ease up railway infrastructure but would also ultimately result in reduced tariffs for electricity consumers, the statement said.
The revised ‘SHAKTI’ policy also provides for the delegation of powers for enabling minor changes in the policy at the level of the concerned Ministries. Further, for dealing with operational issues, an “Empowered Committee” comprising Secretary (Power), Secretary (Coal), and Chairperson, CEA is proposed, the statement added.
(With IANS inputs)