Cabinet approves new coal allocation policy for power sector

The Cabinet Committee on Economic Affairs (CCEA), approved a new transparent coal allocation policy for the power sector called Shakti or Scheme for Harnessing and Allocating ‘Koyala’ (Coal) Transparently in India-2017. This will ensure the rights of coal supplies for Fuel Supply Agreement (FSA) holders and signing of FSA with Letter of Assurance (LoA) holders.

Importance of SHAKTI

  • Thermal Power Plant (TPP) having LoA shall be eligible to sign FSA after ensuring that the plants are commissioned, respective milestones met, all specified conditions of the LoA.
  • The new policy will lead to gradual phasing out of the old one.
  • The policy aimed to ensure coal availability at all power plants and reduce dependence on imports of the dry fuel.
  • It will also help revive the stressed assets in the power sector and expected to bring 30,000 MW of locked capacity into generation.
  • Policy covers coal-based plants that are under-construction or are going to be constructed, provided these units are commissioned by March 31, 2022.
  • Power generation companies belonging to the Centre and the states will not be part of the policy.

Need for the Scheme

The coal supply to the TPPs has been made as per the provisions of the New Coal Distribution Policy (NCDP), 2007. Till 2010, CIL had issued LoA for approximately 1,08,000 MW capacity and no new LoAs were issued thereafter due to the prevailing scarcity scenario. The coal availability scenario has, now, emerged from scarcity to adequacy. In this adequate coal availability scenario, the present policy proposes a fading away of the old linkage allocation policy and emergence of a new linkage allocation policy based on transparent and objective criteria for the optimal utilisation of the natural resources.



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