Cabinet gives nod for SHAKTI coal allocation scheme

  • The Cabinet approved a coal linkage policy, called the Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI), that will award Fuel Supply Agreements (FSAs) to coal plants already holding Letters of Assurance (LoAs).
  • LoAs will be eligible to sign fuel supply pacts under the new policy after ensuring that all the conditions are met.
  • Future coal linkages under the new policy will be granted to central and state generation companies on the recommendations of the Ministry of Power.
  • Those plants that have a Power Purchase Agreement (PPA) but not a Fuel Supply Agreement (FSA), will have to bid on how much discount they would give in electricity supply,” Power Minister Piyush Goyal said “This discount will go to the distribution companies.”
  • “The future coal linkages for supply of coal to independent power producers without PPA shall be on the basis of auction where bidding for linkage shall be done over the notified price of Coal India,” the government said in a statement.
  • “The LoA shall be issued to the successful bidders and FSA signed after meeting the terms of LoA.”
  • India has the third largest reserves of coal,” Mr. Goyal pointed out.
  • Yet there are still 83,100 MW capacity of power plants that are dependent on foreign coal. Governments of the past, instead of bolstering domestic capacity, set up such plants. This is why we still need to import coal because the technology of these plants needs only foreign coal.”
  • “Under the new policy, plants under implementation, plants already set up and plants to be set up in the future will all get coal,” he added.
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