In a significant development, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy for coal allocation to the Power sector.
The revised policy also focuses on creating avenues for setting up more coal-based power plants (at pit head), a critical exercise to meet future base load requirements. Power Ministry is already implementing plans to set up a “minimum” 80 gigawatt (GW) coal fired capacity by 2032.
In a bid to enhance ease of doing business in the coal sector as well as promote addition of thermal power capacity, the Coal Ministry had proposed changes to the SHAKTI policy, including enabling thermal power plants (TPPs) to plan their coal requirement both for the long-and short term.
“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 government said.
Ease of doing business
Under Window-I, the existing mechanism for grant of coal linkage to Central Sector Thermal Power Projects (TPPs) including Joint Ventures (JVs) and their subsidiaries will continue.
Besides, linkages to be earmarked to States as per existing mechanism, on the recommendation of the Power Ministry. 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, it added.
On Window-ii, the government said “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.”
Another critical issue handled by the revised policy is rationalising linkages. With an aim to reduce the ‘landed cost’ of coal at TPP end, coal source rationalisation will be done. This will not only ease up railway infrastructure but would also ultimately result in reduced tariff for electricity consumers.
More thermal capacity
The revised SHAKTI Policy, besides supporting Brownfield expansion, will promote setting up of Greenfield Thermal Power Projects primarily at pithead sites i.e. nearer to the coal source, the government said.
“Requirement of PPA has been entirely done away with for selling the electricity generated through the coal secured under Window-II, thereby providing the power plants the flexibility to sell the electricity as per their choice,” it added.
Besides, 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.