Revised SHAKTI Policy for Coal Allocation
The Government of India has recently approved the Revised Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) to streamline coal allocation to the power sector. This initiative aims to address both long-term and short-term coal requirements. The Cabinet Committee on Economic Affairs, led by Prime Minister Narendra Modi, simplified the linkage process .
Revised SHAKTI Policy
The Revised SHAKTI Policy introduces two main windows for coal allocation. These are:
- Coal linkage to central and state generating companies at a notified price.
- Coal linkage to all generating companies at a premium above the notified price.
This structure aims to enhance the efficiency and transparency of coal allocation.
Window I – Coal Linkage at Notified Price
Under this window, existing mechanisms for coal linkage to Central Sector Thermal Power Projects (TPPs) will continue. States can use their coal linkages for their own generating companies or Independent Power Producers (IPPs). This allows for a more predictable coal supply to established power producers.
Window II – Coal Linkage at Premium Price
This window allows any domestic coal-based power producer with a Power Purchase Agreement (PPA) to secure coal through an auction. They can access coal for a period of up to 12 months or extend it to 25 years. This flexibility encourages the participation of more power producers, including those relying on imported coal.
Implementation Strategy
The policy will be executed by directing Coal India Limited and Singareni Collieries Company Limited to implement the new guidelines. Relevant ministries and state governments will also be informed to ensure smooth dissemination of information.
Benefits
The revised policy aims to simplify the coal allocation process by reducing the complexity from eight paras to just two windows. This change supports the dynamic needs of the power sector. It enables power plants to plan their coal requirements effectively. Additionally, it eliminates the PPA requirement for coal under Window II, granting power plants the flexibility to sell electricity as they choose.
Encouraging New Capacity Addition
The policy facilitates thermal capacity additions by allowing IPPs and private developers to secure coal linkages for new projects, whether they have a PPA or not. This is crucial for meeting future energy demands.
Reducing Dependency on Imported Coal
The policy allows imported coal-based plants to access domestic coal, thus reducing reliance on foreign coal. This strategic move aims to lower costs for consumers and strengthen energy security.
Pithead Power Plants
The Revised SHAKTI Policy promotes the establishment of new thermal power projects near coal sources, known as pithead projects. This reduces transportation costs and enhances efficiency.
Delegation of Powers and Flexibility
The policy allows for minor changes at the ministry level, facilitating quicker adaptations to operational needs. Existing Fuel Supply Agreement holders can also benefit from the new provisions.
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