Government Clears Revised SHAKTI Policy to Improve Coal Supply for Power Plants

The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, has approved changes to the SHAKTI scheme, aimed at improving the way coal is allocated to thermal power plants. The updated policy will make the process more efficient and address both long-term and short-term coal requirements of power producers.

According to the Ministry of Coal, the revised policy allows new coal linkages for power plants in the central and state sectors, as well as for Independent Power Producers (IPPs). The updated scheme introduces two categories for coal supply: one at a fixed, government-notified price, and another at a higher price determined through auctions.

Under the fixed-price category, the current system of granting coal to central sector thermal power plants will continue, ensuring a steady fuel supply. States can also use their allocated coal for their own generation companies or for private producers chosen through competitive bidding, provided they have power purchase agreements.

The second category, which involves a premium over the notified price, will allow power producers using either domestic or imported coal to participate in auctions. These auctions will offer coal supply contracts ranging from one year to twenty-five years, depending on demand.

The government believes the revised SHAKTI scheme will make coal allocation more transparent and reliable, ultimately strengthening India’s energy sector.