Cabinet Clears New SHAKTI Policy to Streamline Coal Supply

The Cabinet Committee on Economic Affairs (CCEA) has approved a revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy.

This policy overhaul aims to simplify coal allocation mechanisms, ensuring a more transparent and efficient supply to the power sector. The revised policy introduces a dual-window system for coal linkage:

• Window-I: Coal linkage at notified prices for central and state government thermal power producers, including joint ventures and their subsidiaries. This continues the existing mechanism, ensuring a steady supply to government-affiliated power plants.

• Window-II: Coal linkage through auction at a premium above notified prices for all domestic and imported coal-based power plants, regardless of existing Power Purchase Agreements (PPAs). This window offers contracts ranging from 12 months to 25 years, providing flexibility for power producers to plan their operations effectively.

A significant change in the revised policy is the removal of the mandatory requirement for PPAs under Window-II. This allows power producers to sell electricity generated from the allocated coal in the open market, enhancing operational flexibility and potentially leading to more competitive electricity pricing. The policy also encourages the establishment of thermal power plants near coal mine pitheads. By promoting pithead-based projects, the government aims to reduce transportation costs, ease the burden on railway infrastructure, and lower the overall cost of electricity generation.

Furthermore, the revised SHAKTI policy facilitates the substitution of imported coal with domestic coal for power plants, reducing dependency on foreign coal and strengthening the country’s self-reliance in energy resources. To implement the new policy, directives will be issued to Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL). Additionally, relevant ministries and state governments will be informed to ensure coordinated execution across various administrative levels.

The government anticipates that these reforms will not only enhance the efficiency of coal allocation but also support the revival of stressed thermal power assets. By providing broader eligibility and greater flexibility, the policy is expected to attract new investments in the power sector, contributing to the nation’s economic growth and energy sustainability. As India continues to pursue its goal of achieving a balanced energy mix, the revised SHAKTI policy represents a strategic step towards ensuring a reliable and affordable power supply for its citizens and industries.

Cabinet Clears New SHAKTI Policy to Streamline Coal Supply