The Cabinet Committee on Economic Affairs approved the Revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy for Coal Allocation to the Power Sector. 

• Introduced in 2017 by Ministry of Coal, SHAKTI Policy is a transparent way of allocating coal to Power Sector.

Key Highlights of the Revised SHAKTI Policy

• Aim: To address the sector’s dynamic coal demands while promoting import substitution and reducing dependence on imported coal.
• Simplified Allocation Framework: It streamlines coal allocation by consolidating the earlier 8 categories into 2 simplified mechanisms to enhance ease of doing business in the power sector.
  • Window-I: Coal linkages at notified prices will continue to be provided to thermal power plants owned by Central and State Governments, including their joint ventures & subsidiaries.
  • Window-II: All thermal power producers, including those using domestic or imported coal, can now procure coal through an auction process, paying a premium over the notified price.
• Removal of Mandatory PPAs (Power Purchase Agreements): For Window-II, the PPA requirement has been scrapped, encouraging private sector participation.
• Caters to Sector’s Dynamic Coal Demands: Auctions will allow procurement for periods ranging from up to 12 months to as long as 25 years.
• Preference to ‘Pithead’ Power Plants: Promote setting up of Greenfield Thermal Power Projects primarily at pithead sites, i.e., nearer to the coal source.