Cabinet approves revised 'SHAKTI' policy for coal allocation to power sector

New Delhi, May 7 (IANS) The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, on Wednesday approved the grant of fresh coal linkages to thermal power plants of the Central Sector, State Sector and Independent Power Producers (IPPs) under the revised 'SHAKTI' policy.

The approval includes Coal linkage to Central Gencos and states at notified price in 'Window–I' and coal linkage to all Gencos at a Premium above notified price in 'Window–II', according to an official statement.

For 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, the statement said.

The coal linkages will be earmarked to states and to an agency authorised 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, the statement explained.

Under 'Window-II' for premium above 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 up to 12 months or for the period of more than 12 months up to 25 years by paying premium above the notified price and providing the power plants the flexibility to sell the electricity as per their choice.

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 will also be apprised of the revised 'SHAKTI' policy for further dissemination to the concerned Departments/Authorities and also to the Regulatory Commissions, the statement said.

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.

The policy will enable the power plants to plan for meeting their coal requirement depending upon their demand for long-term and short–term.

The Central Sector Thermal Power Projects (TPPs) will continue to get coal linkage on nomination basis on the recommendation of Ministry of Power, whereas, the linkages earmarked to the States on nomination basis on the recommendation of Ministry of Power may be utilised by the states in the State Generating Company.

The 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.

Allowing flexible linkage for new capacity addition with or without PPA with a tenure ranging from 12 months to 25 years is expected to encourage IPPs to plan new thermal capacities, which will help in achieving the future thermal capacity addition.

Imported Coal Based (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.

The revised SHAKTI Policy, besides supporting brownfield expansion, will promote setting up of greenfield thermal power projects primarily at pithead sites which are nearer to the coal source.

With an aim to reduce the ‘landed cost’ of coal at thermal power plant 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, the statement said.

The revised 'SHAKTI' policy also provides for delegation of powers for enabling minor changes, in the policy, at the level of concerned Ministries. Further, for dealing with operational issues, an “Empowered Committee” comprising Secretary (Power), Secretary (Coal) and Chairperson, CEA is proposed, the statement added.

--IANS

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