The power ministry proposes to allow coal-fired power plants to sell after finishing their agreements with their buyers. This is despite the national promise to close old plants to control pollution. The Ministry said that the draft proposal, if approved, will help in generating additional revenue and increase liquidity in power markets and distribution companies in states facing a power shortage to access cheaper power.

The letters sent to the power departments of the country's states and utilities such as National Thermal Power Corporation Limited (NTPC) have said that the tariff of electricity must be as low as possible for customer interest.

The Ministry said the move would help government-run generators to sell power in any mode once the company upon completion of the tenure exits the agreement.

Previously, Power Minister RK Singh and Finance Minister Nirmala Sitharaman planned on shutting down old coal-fired power plants. An official has mentioned cost-effective utilities that are known to provide cheap power, will be allowed to operate, whereas inefficient plants would be shut down.

After the plants complete 25 years, distribution companies operating in Punjab, Delhi, Andhra Pradesh, and Odisha want to surrender power allocated by federal government-run utilities, said the power ministry.

The availability of excess power and high cost of electricity were the reasons cited by the states to surrender power under the agreements.

The power ministry compiled a list in 2019 that shows that the distribution companies wanted to surrender power generated from utilities with a capacity of 5.75 GW.

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