The Cabinet Committee on Economic Affairs, chaired by Prime Minister Shri Narendra Modi, has approved the Revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy, introducing a simplified coal allocation framework for the power sector. The revamped policy introduces two main coal linkage windows aimed at meeting dynamic coal demands more efficiently.

Under Window-I, Central Government-owned thermal power plants, including joint ventures and subsidiaries, will continue receiving coal at notified prices through the existing mechanism. States will also be allocated coal linkages on nomination basis, which can be used by State Gencos or Independent Power Producers (IPPs) selected through tariff-based competitive bidding or existing IPPs holding power purchase agreements under Section 62 of the Electricity Act, 2003.

Window-II introduces a more flexible mechanism, allowing any domestic or imported coal-based power plant—with or without a power purchase agreement—to procure coal via auctions for durations ranging from 12 months up to 25 years by paying a premium over the notified price. This offers producers greater autonomy to sell power through markets or bilateral agreements.

Implementation of the revised policy will be overseen by Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL), with guidance from the Ministries of Power and Coal. The new approach significantly simplifies the previous eight-paragraph policy structure into just two windows, improving ease of doing business.

The policy is designed to help power plants better plan for both long-term and short-term coal needs while removing the mandatory requirement for PPAs under Window-II. This is expected to stimulate capacity additions by Independent Power Producers, boost the flexibility of coal procurement, and support both brownfield and greenfield thermal power projects, especially near coal pitheads.

It also supports import substitution by enabling imported coal-based plants to secure domestic coal, thereby reducing reliance on imported fuel. Regulatory bodies will ensure that the resulting cost savings benefit electricity consumers.

The revised SHAKTI policy emphasizes coal linkage rationalization to cut transportation costs and lower tariffs for end users. It proposes empowering ministries to make minor adjustments and establishes an empowered committee comprising senior officials from the power and coal ministries and the Central Electricity Authority (CEA) to oversee operational issues.

The policy also allows existing Fuel Supply Agreement (FSA) holders to procure coal beyond their annual contracted quantities and permits the sale of un-requisitioned surplus power in the market. This is expected to deepen power markets, improve plant utilization, and enhance overall efficiency in power distribution.

Importantly, the revised policy does not impose any additional financial burden on coal companies. Beneficiaries include thermal power plants, railways, coal producers like CIL and SCCL, electricity consumers, and state governments, all of whom stand to gain from a more efficient, transparent, and market-aligned coal allocation system.