The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the Revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy to streamline coal allocation to the power sector.

 

The revised policy introduces two distinct windows for coal linkage: 

1. Window-I: Provides coal linkage at notified prices to Central and State Government-owned power generation companies (Gencos), including joint ventures and their subsidiaries. States can utilize these linkages for their own Gencos or allocate them to Independent Power Producers (IPPs) selected through Tariff Based Competitive Bidding (TBCB) or existing IPPs with Power Purchase Agreements (PPAs) under Section 62 of the Electricity Act, 2003. 

2. Window-II: Offers coal linkage through auction at a premium over the notified price to all Gencos, including those without PPAs and imported coal-based plants, for durations ranging from 12 months up to 25 years. This window provides flexibility for power plants to sell electricity as per their choice. 

Implementation Strategy:

Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) will implement the revised policy. Relevant ministries and state governments will be informed to ensure widespread dissemination and compliance. 

Major Impacts:

1. Simplification: The policy reduces the previous eight allocation categories to two windows, enhancing ease of doing business. 

2. Flexibility: Power plants can plan coal requirements based on long-term or short-term demand, with Window-II allowing operations without mandatory PPAs. 

3. Encouraging Capacity Addition: The policy enables IPPs and private developers to add thermal capacity with or without PPAs, supporting future energy needs. 

4. Import Reduction: Imported coal-based plants can secure domestic coal under Window-II, reducing dependency on imports. 

5. Cost Efficiency: Coal source rationalization aims to lower the landed cost of coal, potentially reducing electricity tariffs for consumers. 

6. Delegated Authority: Minor policy changes can be made by the Ministries of Coal and Power, with an Empowered Committee comprising key officials to address operational issues.

7. Market Optimization: The policy allows sale of un-requisitioned surplus power in markets, promoting optimal utilization of generating stations.

 

The Revised SHAKTI Policy is expected to benefit thermal power plants, railways, coal companies, end consumers, and state governments, without incurring additional costs to coal companies.