07 MAY 2025, New Delhi
The Indian government has approved a revised version of the SHAKTI policy, aimed at making coal allocation to power plants simpler, more flexible, and more transparent.
Under this updated policy, thermal power plants, whether owned by the central or state governments, or private players, will now have two options (called “Windows”) to get coal:
Window-I: Coal at Fixed Government Price
- This is for central and state government-owned power plants.
- Coal will be supplied at government-notified rates.
- States can also distribute this coal to private power producers through bidding or existing agreements.
Window-II: Coal via Auction at Premium Price
- Open to any domestic or imported coal-based power plant.
- These plants can buy coal through auctions by paying a premium above the fixed price.
- No need to have a Power Purchase Agreement (PPA), meaning plants can sell electricity as they wish.
- Coal can be secured for anywhere between 12 months to 25 years.
Key Benefits:
- Simplified process: Coal allocation rules have been reduced from eight categories to just two.
- Supports private power producers: IPPs can now plan new plants with flexible coal supply options.
- Reduces coal imports: Imported coal plants can now use domestic coal, saving costs.
- Encourages setting up plants near coal mines (pithead projects), cutting transportation costs.
- Helps power producers use more coal if needed, beyond their earlier contracted limits.
- Enables unused electricity to be sold in open power markets, boosting supply and competition.
- No extra cost for coal companies to implement this policy.
Implementation:
- Coal India and Singareni Collieries will carry out the new system.
- Ministries and State Governments will be informed.
- A special committee will handle operational issues.
Who benefits?
- Power Plants
- Railways
- Coal suppliers (like Coal India)
- State Governments
- Electricity consumers, as this could lead to lower power tariffs.
Background:
First introduced in 2017, the SHAKTI policy replaced the older nomination system with a more transparent method of coal allocation. It was previously updated in 2019 and 2023. The latest revision focuses on ease of doing business and long-term planning for the power sector.
Source: Press Information Bureau (PIB)
