Context:
The Cabinet Committee on Economic Affairs (CCEA) has accorded its approval for the Revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy for Coal Allocation to Power Sector.
Key Features of the Revised SHAKTI Policy
- Window-I:
- Coal at Notified Price
- Continuation of existing coal linkage mechanisms for Central Sector Thermal Power Projects and State-linked IPPs
- Coal earmarked for State Generating Companies (Gencos) can also be utilized by IPPs through Tariff-Based Competitive Bidding (TBCB) or for new expansion units with Power Purchase Agreements (PPAs)
- Window-II:
- Coal at Premium Price
- Available to domestic and imported coal-based power producers
- Flexible tenure from 12 months to 25 years
- No PPA required for power generation from coal secured under this window, allowing plants flexibility in selling electricity
- Objective of the Revised SHAKTI Policy
- Grant fresh coal linkages to thermal power plants (TPPs) in the Central Sector, State Sector, and Independent Power Producers (IPPs)
- Streamline the coal allocation process, offering flexibility in coal procurement and meeting dynamic power sector needs
Implications
- Employment Generation
- Flexibility for Fuel Supply Agreement (FSA) Holders
- Optimal Use of Power Plants
SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy
The Government of India replaced the old Letter of Assurance (LoA) – Fuel Supply Agreement (FSA) regime with the SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy, notified by the Ministry of Coal on 22 May 2017. This aims to ensure transparent allocation of domestic coal to the power sector.
Key Features
Transition from LoA-FSA
- Continued coal supply for ~68,000 MW capacity at 75% of ACQ.
- ~19,000 MW delayed capacity allowed linkage if commissioned by 31.03.2022.
- Medium-term PPAs via Discom bids made eligible for linkage.
Linkage Mechanisms
- B(i): Linkages at notified prices to State/Central Gencos/JVs on MoP recommendation.
- B(ii): IPPs with long-term PPAs (but no linkage) can bid coal via tariff discount auction.
- B(iii): IPPs without PPAs eligible for auction-based linkages.
- B(iv): Pre-declared linkages earmarked for fresh PPAs.
- B(v): Grouped State power needs can be aggregated for tariff-based procurement.
- B(vi): SPVs for UMPPs eligible for full linkage via competitive bidding.
- B(vii): Transparent linkage for imported coal-based IPPs with cost pass-through.
