GS1 – Geography
Context:
The Cabinet Committee on Economic Affairs has given its approval to the updated SHAKTI Policy.
About SHAKTI Scheme:
Introduced by the Ministry of Coal in 2017, the SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) framework aims to allocate coal linkages in a transparent manner. It was developed to replace the earlier opaque nomination-based system with a competitive model involving auctions and tariff-based bidding. The goal is to lower coal imports and revive financially stressed thermal power units.
Major Revisions in the Policy
- Simplified Framework for Allocation:
The number of categories has been streamlined from eight to two –- Window-I: Allocation on a nomination basis for government-owned power producers.
- Window-II: Auction-based allocation open to all thermal power producers.
- Window-I Features:
Government-owned thermal power stations, including joint ventures and subsidiaries, will continue to receive coal at fixed (notified) prices. - Support for Private Producers:
All thermal power plants, including those relying on domestic or imported coal, can now participate in Window-II auctions and obtain domestic coal, even if they do not have Power Purchase Agreements (PPAs). A premium over the notified price will be applicable. - Flexible Supply Duration:
Coal linkages can be availed for periods ranging from 12 months to 25 years, supporting both short- and long-term supply planning. - Reducing Import Dependence:
Plants that currently use imported coal are encouraged to switch to domestic coal sources. - Surplus Power Market Access:
Power that is not requisitioned by buyers can now be sold in the open market, improving efficiency in power distribution. - Cost Optimization:
Measures like rationalization of coal linkages and favoring pithead-based power stations (close to coal sources) are expected to reduce the cost of coal delivery and ultimately lower tariffs. - Decentralized and Efficient Governance:
The policy empowers a central committee and ministries with greater authority to facilitate quicker decisions and inter-agency coordination. - Promotion of Pithead Power Plants:
The revised policy emphasizes establishing new thermal power plants close to coal mines (pithead) to enhance fuel efficiency and logistics.
Legal and Institutional Backing for SHAKTI
- Coal Mines (Special Provisions) Act, 2015:
Enabled transparent coal allocation through auctions and encouraged private sector involvement. - Mines and Minerals (Development and Regulation) Amendment Act, 2021:
Allowed the granting of combined prospecting and mining leases (PL-cum-ML), accelerating coal block development. - Commercial Coal Mining (2020):
Opened coal mining to private entities without any restriction on end use. - Technological Oversight Mechanisms:
Tools like the Coal Mines Surveillance and Management System and the Khanan Prahari App have been introduced to combat illegal coal mining activities.