New Delhi: The Cabinet Committee on Economic Affairs (CCEA) has approved a revised framework under the Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) to simplify coal allocation to the power sector. The decision was announced on May 7 after a cabinet meeting chaired by Prime Minister Narendra Modi. The revised policy introduces two clear windows for coal linkage intended to offer flexibility, reduce dependence on imports, and support both public and private power producers.
Two-Window Coal Allocation Model Introduced
Under the updated structure:
Window I allows central and state government-owned power plants (including their joint ventures and subsidiaries) to receive coal at the notified price through the existing allocation mechanism. States can also nominate an authorised agency for coal procurement, and use the coal in their own generating companies (gencos).
Window II enables any domestic coal-based power producer, regardless of ownership, to bid for coal at a premium over the notified price. This includes units using imported coal. These linkages can be secured through auctions for a period ranging from one year to 25 years. Power producers will also have the flexibility to sell electricity outside of traditional Power Purchase Agreements (PPAs), based on market conditions.
Policy Simplifies Process, Supports New Projects
Officials said the revision condenses the previous eight linkage categories into just two windows, aimed at improving transparency and reducing procedural delays. The government also expects the move to support the development of greenfield power projects near coal sources (pithead sites) and aid the brownfield expansion of existing facilities. The policy update is aligned with broader goals of import substitution and resource optimization. It is also expected to benefit stakeholders including Indian Railways, Coal India Ltd, Singareni Collieries Company Ltd, and state utilities.
