The Ministry of Coal has introduced revisions to its SHAKTI Policy for coal allocation to the power sector, underlining a shift towards transparency and auction-based bidding mechanisms. This updated policy consolidates previous reforms initiated by the government to alter the coal allocation process from nomination-based to a more transparent system via auctions since 2017. The new version streamlines the system into two windows.
Window I assigns coal linkages at notified prices for Central and State Electricity Generators (Gencos) as well as Joint Ventures (JVs), their subsidiaries under existing mechanisms, allocating coal as per Ministry of Power recommendations to States or a group of States’ authorized agency. The coal can be utilized by these entities within the jurisdiction of their own Gencos, IPPs identified through a competitive bidding process (Tender Based Competitive Bidding - TBCB) that operate under Section 62 of the Electricity Act, 2003 for new expansion units with operational PPAs.
Window II provides opportunities allowing additional payments above the notified price. This enables existing or future domestic coal-based power producers and imported coal-based plants (International Coal Based - ICBs) to secure coal through auctions for up to 12 months or longer terms (up to 25 years). These power generators have flexibility in choosing how they sell their electricity.
The revised SHAKTI policy aims to maximize the utilization of domestic coal, ensure seamless thermal capacity addition and reduce reliance on global markets. It also supports efforts towards 'energy security for all', aligning with national policies on self-reliance ('Atmanirbhar Bharat Initiative').
This policy change enhances competition, efficiency and accessibility in coal allocation processes, potentially streamlining business operations and generating employment opportunities while supporting economic activities and contributing to energy security.
Key Entities Referenced
Ministry of Coal: The government ministry responsible for the Revised SHAKTI Policy.
Revised SHAKTI Policy: A revised policy for coal allocation to the power sector in India, aiming for transparency and efficiency.
08 MAY 2025: The date the policy was posted.
PIB Delhi: Press Information Bureau, Delhi - the source of the notification.
Cabinet Committee on Economic Affairs CCEA: The committee that approved the Revised SHAKTI Policy.
07.05.2025: The date of the CCEA meeting where the Revised SHAKTI Policy was approved.
Prime Minister Shri Narendra Modi: The Prime Minister of India, who chaired the CCEA meeting.
SHAKTI Scheme: Scheme for Harnessing and Allocating Koyala Transparently in India. The full form of SHAKTI.
2017: The year the initial SHAKTI Policy was introduced.
Atmanirbhar Bharat Initiative: A government initiative promoting self-reliance in India.
Unrequisitioned Surplus URS: Capacity for generating power, for sale in power markets.
Imported Coal Based ICB: Plants that can secure domestic coal thereby reducing their import coal dependency.
Thermal Power Plants: Power plants that use heat to generate electricity.
Central Sector: Refers to power generation companies owned by the central government.
State Sector: Refers to power generation companies owned by state governments.
Independent Power Producers IPPs: Private companies that generate electricity.
Central Gencos: Central government owned generation companies.
States: Refers to state governments in India.
Notified price: The price of coal as determined and announced by the relevant authority.
WindowI: One of the two windows approved under the Revised SHAKTI policy for grant of fresh coal linkages.
WindowII: One of the two windows approved under the Revised SHAKTI policy for grant of fresh coal linkages.
Central Sector Thermal Power Projects TPPs: Thermal power projects owned by the central government.
Joint Ventures JVs: Collaborative power projects between different entities.
Ministry of Power: The government ministry responsible for electricity and power.
TBCB: Tariff Based Competitive Bidding.
PPA: Power Purchase Agreement.
Section 62 of the Electricity Act, 2003: Refers to a section of the Electricity Act of 2003.
Energy Security for All: Government push for Energy Security for All
Ministry of Coal
Revised SHAKTI Policy for Coal Allocation to Power
Sector
Posted On: 08 MAY 2025 12:09PM by PIB Delhi
The Cabinet Committee on Economic Affairs (CCEA) in the meeting held on 07.05.2025, chaired by the
Prime Minister Shri Narendra Modi, has accorded its approval for the Revised SHAKTI (Scheme for
Harnessing and Allocating Koyala Transparently in India) Policy for Coal Allocation to Power Sector. The
Revised SHAKTI Policy adds to the series of coal sector reforms being undertaken by the Government.
With the introduction of SHAKTI Policy in 2017, there was a paradigm shift of coal allocation mechanism
from a nomination-based regime to a more transparent way of allocation of coal linkages through auction /
tariff-based bidding. Now, the multiple paras of the SHAKTI Policy, for coal linkage, have been mapped to
only two Windows in the Revised SHAKTI Policy, aligning with the spirit of ease of doing business,
encouraging competition, efficiency, better use of capacity, seamless pit head thermal capacity addition and
affordable power to the country.
The current revision with innovative features will further enhance the scope and impact of the SHAKTI policy
and support the power sector through
Greater flexibilityWider eligibility andBetter accessibility to coal
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The new policy will ensure coal linkage to all power producers leading to generation of more power, cheaper
tariffs and an overall positive impact on the economy, thereby leading to increased employment generation
potential. The reliable and affordable power supply to various sectors would catalyze economic activities and
support the Atmanirbhar Bharat Initiative. The increased availability of domestic coal, in a simplified manner
would also facilitate the revival of remaining stressed power assets. The linkage coal can now be used for
generating power from Un-requisitioned Surplus (URS) capacity, for sale in power markets, which will not
only deepen power markets by increasing availability of power in power exchanges but will also ensure
optimum utilization of generating stations.
Further, the new linkages offered to the power sector would increase the coal availability for the power sector
and increase the mining activities in the coal bearing regions resulting in generation of higher revenue to the
State Governments which can be utilized for development of these regions and local population in general.
The policy would encourage pit head thermal capacity addition and facilitate imported coal substitution in the
Imported Coal Based (ICB) plants that can secure domestic coal thereby reducing their import coal
dependency.
Following are the provisions of the Revised SHAKTI Policy.
For grant of fresh coal linkages to Thermal Power Plants of Central Sector/State Sector/ Independent Power
Producers (IPPs), following two windows have been approved under the Revised SHAKTI policy:
A. Coal Linkage to Central Gencos/States at Notified price: Window–I
B. Coal Linkage to all Gencos at a Premium above Notified price: Window–II
Window-I (coal at notified price):
i. Existing mechanism for grant of coal linkage to Central Sector Thermal Power Projects (TPPs)
including Joint Ventures (JVs) & their subsidiaries would continue.
ii. 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 utilized by States in its own Genco, IPPs to be identified through TBCB or existing
IPPs having PPA under Section 62 of the Electricity Act, 2003 for setting up of a new expansionunit having PPA under Section 62.
Window-II (premium over notified price):
Any domestic coal-based power producer having PPA or untied and also Imported coal-based power plants
(if they so require) can secure coal on auction basis for a period upto 12 months or for the period of more
than 12 months upto 25 years by paying premium above the notified price and providing the power plants the
flexibility to sell the electricity as per their choice.
This Revised SHAKTI Policy would maximize domestic coal utilization, ensure seamless thermal capacity
addition, reduce dependence for coal on global markets, reinforce nation’s energy independence aligning with
Government’s push for Energy Security for All.
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Shuhaib T
(Release ID: 2127652)