New Delhi: The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved the revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) scheme for allocation of coal to thermal power plants, under which coal allocations will now happen under two windows. In order to meet the long-term and short-term requirements of coal, thermal power plants will now be able to avail coal at notified price under Window-I and at a premium above the notified price under Window-II.
“With the introduction of Revised SHAKTI Policy, existing eight paras, for coal allocation, have been mapped to only two Windows, in the spirit of ease of doing business. Window-I (coal linkage at notified price) and Window-II (coal linkage at premium above notified price). The revised SHAKTI Policy shall enable the Power Plants to plan for meeting their coal requirement depending upon their demand for Long-Term/Short – Term,” said the Ministry of Coal in a statement on Wednesday.
Under Window-I, the existing mechanism for grant of coal linkage to Central Sector Thermal Power Projects (TPPs) including Joint Ventures (JVs) and their subsidiary will continue. “Coal linkages to be earmarked to States and to an agency authorized by group of States as per existing mechanism, on the recommendation of Ministry of Power. Coal linkage earmarked to States may be utilised by States in its own Genco, Independent Power Producers (IPPs) to be identified through Tariff Based Competitive Bidding (TBCB) or existing IPPs having Power Purchase Agreement (PPA) under Section 62 of the Electricity Act, 2003 for setting up of a new expansion unit having PPA under Section 62,” said the Ministry of Coal.
Under Window-II, any domestic coal-based power producer having PPA or not, and also Imported Coal-Based power plants (if they so require) can secure coal on auction basis for a period of upto 12 months or for the period of more than 12 months upto 25 years by paying premium above the notified price. Power plants that procure coal under this window will have the flexibility to sell the electricity anywhere, including on the exchange, as per their choice. “Allowing flexible linkage for new capacity addition with or without PPA with a tenure ranging from 12 months to 25 years will encourage IPPs to plan new thermal capacities, which will help in achieving the future thermal capacity addition,” said the Coal Ministry.
ICB plants can secure domestic coal under Window-II, subject to the technical constraints of ICB plants, thereby reducing their import coal dependency. The benefits accrued, on account of import coal substitution, would be determined by Appropriate Regulatory Commission and passed on to the electricity consumers/beneficiaries, said the ministry.
The revised SHAKTI Policy, besides supporting brownfield expansion, will promote setting up of Greenfield Thermal Power Projects primarily at pithead sites, ie, nearer to the coal source, said the Coal Ministry. With an aim to reduce the ‘landed cost’ of coal at thermal power plant end, coal source rationalisation will be done under the policy. This will not only ease up railway infrastructure but would also ultimately result in reduced tariff for electricity consumers, the ministry said.
The participation of existing Fuel Supply Agreement (FSA) holders beyond 100 percent of their Annual Contracted Quantity (ACQ) of coal under Window-II will benefit power producers. Upon expiry of coal linkages secured under old policies, power producers (Central Gencos, State Gencos and Independent Power Producers) may apply under the present proposed revised policy, as applicable, to secure fresh linkages. “This will enable sale of power generated through linkage coal in power markets. This will not only deepen power markets by increasing availability of power in power exchanges but will also ensure optimum utilisation of generating stations,” said the government. The revised policy would not involve any additional cost to the coal companies, said the Coal Ministry.
“Directions would be issued to Coal India Limited (CIL)/ Singareni Collieries Company Limited (SCCL) for implementation of the aforesaid decisions. Besides, the concerned Ministries and all the States shall also be apprised of the revised SHAKTI Policy for further dissemination to the concerned Departments / Authorities and also to the Regulatory Commissions,” it added.
The revised SHAKTI Policy provides for delegation of powers for enabling minor changes, in the policy, at the level of concerned Ministries (Ministry of Coal and Power). Further, for dealing with operational/implementation issues, an “Empowered Committee” comprising of Secretary (Power), Secretary (Coal) and the CEA Chairperson is proposed.
