Page 46 - FIPI - Policy Economic Report - May 2025

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

With the introduction of SHAKTI Policy in 2017, there was a paradigm shift of coal allocation mechanism
from a nomination-based regime to a more transparent way of allocation of coal linkages through
auction / tariff-based bidding. Now, the multiple paras of the SHAKTI Policy, for coal linkage, have been
mapped to only two Windows in the Revised SHAKTI Policy, aligning with the spirit of ease of doing
business, encouraging competition, efficiency, better use of capacity, seamless pit head thermal capacity
addition and affordable power to the country.

The current revision with innovative features will further enhance the scope and impact of the SHAKTI
policy and support the power sector through

? Greater flexibility

? Wider eligibility and

? Better accessibility to coal

The new policy will ensure coal linkage to all power producers leading to generation of more power,
cheaper tariffs and an overall positive impact on the economy, thereby leading to increased
employment generation potential. The reliable and affordable power supply to various sectors would
catalyze economic activities and support the Atmanirbhar Bharat Initiative. The increased availability of
domestic coal, in a simplified manner would also facilitate the revival of remaining stressed power
assets. The linkage coal can now be used for generating power from Un-requisitioned Surplus (URS)
capacity, for sale in power markets, which will not only deepen power markets by increasing availability
of power in power exchanges but will also ensure optimum utilization of generating stations.

Further, the new linkages offered to the power sector would increase the coal availability for the power
sector and increase the mining activities in the coal bearing regions resulting in generation of higher
revenue to the State Governments which can be utilized for development of these regions and local
population in general. The policy would encourage pit head thermal capacity addition and facilitate
imported coal substitution in the Imported Coal Based (ICB) plants that can secure domestic coal
thereby reducing their import coal dependency.

Following are the provisions of the Revised SHAKTI Policy.

For grant of fresh coal linkages to Thermal Power Plants of Central Sector/State Sector/ Independent
Power Producers (IPPs), following two windows have been approved under the Revised SHAKTI policy:

A. Coal Linkage to Central Gencos/ States at Notified price: Window–I

B. Coal Linkage to all Gencos at a Premium above Notified price: Window–II

Window-I (coal at notified price):

i. Existing mechanism for grant of coal linkage to Central Sector Thermal Power Projects (TPPs)
including Joint Ventures (JVs) & their subsidiaries would continue.

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