Syllabus

GS 1: Distribution of key natural resources

GS 2: Government policies and interventions for development in various sectors

Context: 

Recently, the Cabinet Committee on Economic Affairs (CCEA) has approved the Revised Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) Policy to make more coal available to thermal power plants belonging to the central sector and state sector, and Independent Power Producers (IPPs).

Revised SHAKTI Policy  

• The new policy will provide coal supply to all power producers, helping generate more electricity at lower costs, boosting the economy and creating more job opportunities.
• The revised policy simplifies coal allocation through two mechanisms—Window-I and Window-II—streamlining the existing eight allocation categories to promote ease of doing business

• The current revision with innovative features will further enhance the scope and impact of the SHAKTI policy and support the power sector through

• Greater flexibility
• Wider eligibility and
• Better accessibility to coal

Window-I: Allocation at Notified Prices

Coal linkages will be granted at notified prices to:  

• Central and State Government-owned thermal power projects.
• Joint ventures and subsidiaries of these entities.

States can use these linkages for:

• Their own generation companies.
• Independent Power Producers (IPPs) selected via Tariff-Based Competitive Bidding (TBCB).
• Projects with existing Power Purchase Agreements (PPAs) under Section 62 of the Electricity Act.

Window-II: Market-Based Auctions

• Domestic coal-based power producers, whether they have Power Purchase Agreements (PPAs) or operate on an untied basis as well as imported coal-based plants, can obtain coal through auctions.
• Auctions will be held at a premium over notified prices.
• Linkages are available for durations ranging from 12 months to 25 years.
• Power generated using coal from this window can be sold without a PPA i.e. based on dircretion, to ensure greater market flexibility.
• Imported Coal-Based (ICB) plants can now access domestic coal, subject to technical feasibility, with consumer benefits regulated by commissions.

Implementation and Oversight

• Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) will implement the revised SHAKTI policy.
• Relevant ministries, state governments, and regulatory bodies will be notified for dissemination and execution.