The Ministry of Power has released new methodologies for allocating and earmarking coal linkages under Windows I and II of the Revised SHAKTI Policy, 2025. This follows the approval of the policy by the Cabinet Committee on Economic Affairs (CCEA) on May 7, 2025, and a subsequent notification from the Ministry of Coal on May 20, 2025.
The Revised SHAKTI Policy, 2025, provides two distinct windows for granting fresh coal linkages to Thermal Power Plants (TPPs):
Window I: For Central Generating Companies (GENCOs) and State Governments, with coal allocated at Notified Prices.
Window II: For all GENCOs, with coal allocated through auctions at a premium above Notified Prices.
The methodologies, finalized by an Empowered Committee, aim to ensure a transparent, objective, and efficient process for fresh coal allocation.
Methodology for Window I: Allocation at Notified Prices
This window is designed to provide coal linkages at a fixed price to government-owned power projects.
Eligibility: Coal linkages can be allocated to Central GENCOs (including joint ventures and subsidiaries) for projects that are under planning, under construction, or already commissioned. Linkages can also be earmarked for State Governments or groups of states to allocate to their own state GENCOs, existing Independent Power Producers (IPPs) with a PPA, or successful bidders identified through a Tariff Based Competitive Bidding (TBCB) process.
Capacity Limit: The total thermal power generation capacity for which a State Government seeks earmarking should not exceed the additional coal-based capacity required as per the state’s Resource Adequacy study.
Eligibility Conditions: To be considered, TPPs must not be linked to any captive coal block, though exceptions may be made for remaining capacity if a captive block cannot meet the full requirement. For projects under planning, a Pre-Feasibility Report (PFR) must be approved by the respective board.
Process and Timelines: The process involves applications to the Ministry of Power, which then recommends the allocation to the Standing Linkage Committee (SLC(LT)) of the Ministry of Coal. Timelines for various stages, including submitting commitment guarantees (within 2 months), receiving a Letter of Assurance (LoA) (within 2 months), signing a Fuel Supply Agreement (FSA) (within 2 years), and the commencement of coal drawl (within 5 years for new projects), have been specified.
Methodology for Window II: Auction at a Premium
This window introduces a competitive, auction-based mechanism for all GENCOs to secure coal linkages. It is divided into short-term and medium/long-term auctions.
- Auction Mechanisms:
- Short-Term Auction: A half-yearly auction to secure coal linkage for a period of up to 12 months, catering to short-term power demand.
- Medium/Long-Term Auction: A yearly auction to secure coal linkage for a period of more than 12 months and up to 25 years.
- Eligibility: A wide range of entities can participate, including any commissioned TPP (with or without a PPA), Imported Coal-Based (ICB) plants with PPAs, and existing FSA holders. This window is also open to TPPs under construction or planning.
- Eligible Coal Quantity: The eligible quantity is calculated as the coal required for the total installed capacity at 100% Plant Load Factor (PLF) minus any existing coal linkages or quantities from captive blocks.
- Usage of Electricity: Under both Window I and Window II, the coal linkage is for generating electricity for the grid. Any un-requisitioned surplus power can be sold in power market platforms.
The Ministry of Power has directed all relevant authorities, including the Central Electricity Authority (CEA), the Central Electricity Regulatory Commission (CERC), state governments, and various public sector undertakings, to take necessary action to implement these methodologies. The new guidelines are expected to bring greater transparency and efficiency to the allocation of coal, supporting the continued development of the nation’s power sector.