New Delhi: The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, today approved fresh coal linkages for Thermal Power Plants (TPPs) under the Revised SHAKTI Policy, establishing two windows for allocation to meet power sector coal requirements. Implemented through Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL), the policy aims to streamline coal supply, reduce import dependency, and enable power market participation, though auction processes and regulatory oversight may shape outcomes.
The Revised SHAKTI Policy consolidates eight allocation paragraphs from the 2017 SHAKTI Policy, amended in 2019 and 2023, into two windows: Window-I, providing coal at notified prices for Central and State Generating Companies (Gencos), and Window-II, offering coal at a premium above notified prices for all Gencos, including Independent Power Producers (IPPs), without requiring a Power Purchase Agreement (PPA). The 2017 policy shifted from nomination-based to auction-based allocations, with nominations retained for Central/State plants. Analysis indicates the two-window structure reduces procedural steps, but premium pricing in Window-II may raise electricity costs, requiring regulatory measures to protect consumers.
Window-I continues the existing mechanism for Central Sector TPPs, including Joint Ventures and subsidiaries, to secure coal linkages at notified prices on recommendations from the Ministry of Power (MoP). States receive earmarked linkages for their Gencos, IPPs identified through Tariff-Based Competitive Bidding (TBCB), or existing IPPs with PPAs under Section 62 of the Electricity Act, 2003, for new expansion units with similar PPAs. This structure maintains a coal supply for public sector plants. Analysis suggests nominations provide supply consistency but may limit cost competitiveness compared to auction-based allocations.
Window-II enables domestic and imported coal-based (ICB) power producers, with or without PPAs, to secure coal through auctions for tenures of 12 months to 25 years, paying a premium above notified prices. Producers can sell electricity as chosen, including in power markets. Existing Fuel Supply Agreement (FSA) holders may participate beyond 100% of their Annual Contracted Quantity (ACQ), and upon expiry of old linkages, all producers can apply under the revised policy. Analysis shows this flexibility supports new thermal capacity by IPPs, but premium costs may increase tariffs, necessitating consumer-focused regulatory adjustments.
Implementation involves issuing directions to CIL and SCCL, notifying the Ministry of Coal (MoC), MoP, States, and Regulatory Commissions, and proposing an Empowered Committee of Secretaries of Power and Coal and the Central Electricity Authority (CEA) Chairperson to address operational issues. Delegation of powers to MoC and MoP allows minor policy changes. Analysis indicates this governance framework supports execution, but stakeholder coordination will determine allocation efficiency.
The policy consolidates eight paragraphs into two windows, aligning with the ease of doing business objectives. It addresses short- and long-term coal needs, enables ICB plants to access domestic coal under Window-II, and supports pithead and brownfield projects. Linkage rationalisation reduces coal’s landed cost, easing railway infrastructure and lowering tariffs. Surplus power sales in markets increase power exchange availability. Employment increases through new thermal capacities.
No additional costs apply to CIL or SCCL. Beneficiaries include TPPs, Railways, CIL, SCCL, consumers, and State Governments. Analysis shows import substitution may reduce trade deficits, but coal reliance raises environmental considerations, requiring complementary clean energy measures. Power market flexibility may deepen exchanges, though demand fluctuations could affect producer participation.
The policy’s import reduction, cost rationalisation, and market flexibility address power sector needs. Auction competitiveness, regulatory oversight, and environmental trade-offs will shape its impact on energy supply and consumer costs, influencing India’s power sector trajectory.
– global bihari bureau
