On May 07, 2025, the Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Shri Narendra Modi, approved the Revised SHAKTI Policy for coal allocation to the power sector. This significant reform, vital for competitive exam aspirants, enhances transparency, efficiency, and energy security under the Atmanirbhar Bharat initiative.
Overview of the Revised SHAKTI Policy
Evolution from 2017 Policy
Introduced in 2017, the SHAKTI Policy shifted coal allocation from a nomination-based system to a transparent auction and tariff-based bidding mechanism. The revised policy simplifies this framework into two windows, promoting ease of doing business, competition, and efficient use of coal resources.
Key Objectives
The policy aims to ensure greater flexibility, wider eligibility, and better coal accessibility for power producers, leading to increased power generation, cheaper tariffs, and economic growth.
Provisions of the Revised Policy
Window-I: Coal at Notified Price
This window retains the existing mechanism for granting coal linkages to Central Sector Thermal Power Projects (TPPs), including Joint Ventures (JVs) and subsidiaries. States or authorized agencies can secure earmarked coal linkages for their Generating Companies (Gencos), Independent Power Producers (IPPs) identified through Tariff-Based Competitive Bidding (TBCB), or existing IPPs with Power Purchase Agreements (PPAs) under Section 62 of the Electricity Act, 2003, for new expansion units.
Window-II: Premium Over Notified Price
Domestic coal-based power producers with or without PPAs, as well as Imported Coal-Based (ICB) plants opting for domestic coal, can secure coal linkages through auctions by paying a premium above the notified price. Linkages can be for periods ranging from 12 months to 25 years, offering flexibility to sell electricity in power markets.
Impact on the Power Sector
Enhanced Power Generation
The policy ensures coal linkages for all power producers, enabling the use of Un-requisitioned Surplus (URS) capacity and power sales in exchanges, deepening power markets and optimizing generating stations.
Revival of Stressed Assets
Increased domestic coal availability will facilitate the revival of stressed power assets, supporting reliable and affordable power supply to various sectors and catalyzing economic activities.
Economic and Regional Benefits
Boost to Coal-Bearing Regions
Enhanced coal linkages will increase mining activities in coal-bearing regions, generating higher revenue for state governments, which can be utilized for regional development and improving local livelihoods.
Support for Atmanirbhar Bharat
The policy encourages pithead thermal capacity addition and substitution of imported coal in ICB plants, reducing dependency on global markets and reinforcing India’s energy independence.
Alignment with National Goals
Energy Security and Economic Growth
By maximizing domestic coal utilization and ensuring seamless thermal capacity addition, the Revised SHAKTI Policy aligns with the government’s push for energy security and economic self-reliance, fostering employment generation and industrial growth.
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