Lok Sabha Question No. 1812 (UNSTARRED), answered on 2020-09-21
Subject: Shakti Scheme
Ministry: COAL
Asked by: Sangeeta Kumari Singh Deo, Bhola Singh, Jayanta Kumar Roy, Raja Amareshwara Naik, Vinod Kumar Sonkar, Sukanta Majumdar

(a): Yes, Sir.

(b): The Government approved the fading away of the existing Letter of Assurance (LoA) - Fuel Supply Agreement (FSA) regime and introduced Scheme for Harnessing and  Allocating  Koyala  (Coal)  Transparently  in  India  (SHAKTI),  2017,  which  was issued  by  the  Ministry  of  Coal  on  22.05.2017.  The  Government  also  approved amendments to the SHAKTI Policy, 2017, which was issued by the Ministry of Coal on 25.03.2019. A copy of SHAKTI policy is at Annexure.

Coal  linkages to the following  capacities  have  been  granted  under  various provisions of the SHAKTI policy:

- (i) Clearance has been given for signing of Fuel Supply Agreement (FSA) for 10 power plants with a total  capacity  of  6,550  MW  under provisions  of  para  A(i) of  SHAKTI policy.

## GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA

## UNSTARRED QUESTION NO.1812 TO BE ANSWERED ON 21.09.2020

## Shakti Scheme

## 1812. SHRIMATI SANGEETA KUMARI SINGH DEO:

SHRI BHOLA SINGH:

DR. JAYANTA KUMAR ROY:

SHRI RAJA AMARESHWARA NAIK:

SHRI VINOD KUMAR SONKAR:

DR. SUKANTA MAJUMDAR:

## Will the Minister of COAL be pleased to state:

- (a)  whether  the  Government  has  launched  SHAKTI  (Scheme  for  Harnessing  and Allocating  Koyala  Transparently  in  India)  policy  for  better  allocation  of  coal  to present and future power plants in India;
- (b)  the  main  features  of  the  SHAKTI  scheme  and  the  current  status  of  its implementation in the country;
- (c) the list of States, currently eligible under the SHAKTI scheme;
- (d) whether SHAKTI has been transparent and helped to address the coal linkage problems of all stressed power plants;
- (e) if so, the details thereof along with the reaction of the Government thereto; and
- (f)  the  details  of  the  sanctioned/ongoing  projects  that  are  being  undertaken  by Karnataka and the funds transferred under the said scheme?

## ANSWER

## MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES

## (SHRI PRALHAD JOSHI)

(ii)  23  Thermal  Power  Plants  (TPPs)  have  been  granted  linkage  for  a  total capacity of 25340 MW under provisions of para B (i) of SHAKTI policy. (iii) First round of linkage auction under B(ii) of SHAKTI policy was conducted in September, 2017, whereby 27.18 Million Tonne Per Annum  (MTPA) of annual coal linkage was booked by ten successful bidders for about 9,045 MW capacity. During the second round, quantity of 2.97 MTPA of linkage has been booked by eight bidders for  about  874.9  MW  capacity.   In  the  third  round,  auction  has been conducted by PFC Consulting Limited (PFCCL) during May, 2020, where, 2.8 MTPA linkages have been booked by 5 successful bidders. (iv) The  linkage  auction  for  SHAKTI  B  (iii)  was  conducted  in  February,  2020, where out of the total offer of 11.8 MTPA, 6.5 MTPA was booked by 7 successful bidders. (v)  Coal linkage have been earmarked from CIL for the States  of Gujarat, Uttar Pradesh and Madhya Pradesh for a capacity of 4000 MW, 1600 MW and 2640 MW respectively for linkage  under B(iv) of SHAKTI Policy. (vi)  Coal  linkage  earmarked  from  CIL  for  a  capacity  of  2500  MW  for  linkage under B(v) of  SHAKTI policy. (vii) Auction for April-June'2020 was completed during March 2020 for linkage under  provisions  of  paraB(viii)(a)  of  SHAKTI  policy.  Out  of  5.77  MT  of  coal offered by CIL, 1.34 MT was booked by 9 successful bidders. Auction for JulySeptember, 2020 was completed on 13.07.2020.  4.91 MT coal was offered by CIL and 0.63 MT coal was booked by 8 successful bidders. (c): All the States and Union Territories are eligible under SHAKTI policy, subject to terms and conditions mentioned in the policy. (d): SHAKTI  policy  is  a  transparent  way  of  allocating  coal  to  the  Power  Plants including stressed power plants. (e): The  Cabinet  Committee  on  Economic  Affairs  (CCEA)  on  07.03.2019  had considered the Note from the Ministry of Power on the recommendation of Group of Ministers (GoM) Constituted to examine the specific recommendation of High Level Empowered  Committee  (HLEC)  constituted  to  address  the  issues  of  Stressed Thermal Power Projects and has approved the amendments in the SHAKTI Policy issued by Ministry of Coal on 25.03.2019 and para B(ii)(i), B(ii) (ii)  and Para B(viii) (a) to (e)  have been added to the SHAKTI policy. Coal  linkage  has  been  granted  to  Karnataka  Power  Corporation  Limited  for

(f): Bellary  TPS  Unit-3  (700  MW)  and  Yermarus  Thermal  Power  Station  (2x800  MW) under  B(i)  of  SHAKTI  Policy.  There  is  no  Provision  of  fund  transfer  under  the SHAKTI Policy.

*****

To

- (r) Chairman-cum-Ma naging Director, Coal lndia Limited, CoaJ Bhawan,  New Town, Rajarhat,  Kolkata-700 1 56.
- (ii) Chairman-cum-ManagingDirector, SCCL, PB No. 18, Khairatabad,  Hyderabad, Telangana.

Subject: Signing of Fuel Supply Agreement (FSA) with Letter of Assurance (LoA) holders  of Thermal Power Plants- Fading Away of the existing  LoA-FSA Regime and lntroduction of a New More Transparent Coal Allocation Policy for Power Sector, 2017- SHAKTI (Scheme for Harnessing  and Allocating  Koyala  (Coal) Transparently  in lndia).

Sir,

The proposal  of Coal linkages Allocation Policy for Power  Sector has been under examination in this Minisiry. With lhe approval  of Cabinet Committee on Economic Affa irs (CCEA), the following policy guidelines for allocation of Coal linkages  to Power Sector have been decided:

## (A) Under the old regime of LoA-FSA:

- i. FSA may be signed with the pending LoA holders after ensuring that the plants are commissioned, respective  milestones met, all specified  conditions  of the LoA fulfilled wilhin specified  timeframe  and where  nothing  adverse  is detected  against the LoA holders.  The outer time limit within which the power plant of LoA holders  must be comm  jssioned  for consideration  of FSA shall be 31.03.2022, failing which LoA would stand cancelled.  Coal supply to these capacities  may be al 7 5% oi ACQ. The coal supply to these capacities may be increased  in future based on coal availability.
- ii. The 583 pending  applications for LoA need not be considered  and may be closed.

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## No. 2301 111512016-CPD/CLD Government  of India Ministry of Coal

Shastri Bhawan, New Delhi, lhe 221d May, 2017

- iii. The capacities totaling about 68,000 MW as per the decision of CCEA dated 21.06.2013  would continue to get coal at 7 5o/o ot ACQ even beyond 31 .03.2017. The coal supply to these capacities  may be increased  in future  based on coal availability.
- iv. About 19,000 MW capacities  out of the 68,000 NflW could not be commissioned by 31 .03,2015,  Coal supply  to these  capacities may be allowed at 75% of ACQ against FSA provided these plants  are commissioned within 31.03.2022. The coal supply to these capacities  may be increased  in future based on coal availability.
- v. Actual coal supply to  power plants  shall be to the extent of long-term  pPAs  with DISCOM/State  Designated  Agencies (SDAs) and medium term PPAs to be concluded in future against  bids to be invited by DISCOMs as per bidding guidelines issued by Ministry of Power.

With these, the old regime of LoA-FSA  would  come  to finality and fade away.

- (B) The following  shall be considered  under a New More Transparent  Coal Allocation Policy for Power  Sector, 2017-SHAKTI (Scheme  for Harnessing  and Allocating Koyala (Coal)  Transparently  in India):
- (D CIL/SCCL may grant Coal linkages for Central Government and State Government  Gencos  at the notified price of CIL/SCCL. Similarly,  coal linkages  may be granted  for JVs formed between or within CPSUs and State Govt./PSUs. The recommendations  shall be made by Ministry of Power.
- (ii) CIL/SCCL may grant coal linkages  on notified price on auction basis for power producers/lPPs  having already  concluded long term PPAs (both under section  62 and section  63 of The Electricity  Act, 2003) based on domestic  coal. Power  producers/lPPs, participating  in auction will bid for discount  on the tariff  (in paise/unit).  Bid Evaluation Criteria shall be the non-zero  Levellised  Value of the discount (applying  a pre-notified discount rate) quoted by the bidders  on the existing tariff for each year of the balance period  of the PPA. Ministry of Coal may, in consultation  with Ministry  of Power, work out a methodology on normative basis to be used in the bidding process  for allocation of coal linkages tc lPPs with PPAs.
- (a)  The discount by generating companies  would be adjusted from the  gross  amount of bill at the time of billing, i.e., the original bill shall be raised  as  per  the terms  and conditions  of the PPA and the discount would be reduced from the gross amount of the bill.  The discount shall be computed  with reference  to scheduled  generation  from linkage coal supplied  under this auction.  This would be applicable to both the PPAs contracted  under Section 62 as well as Section 63 of the Electricity Act, 2003.
- (b) Accordingly,  PPA may be amended or supplemented mutually between the developer  and the procurer  to pass on the discount to the procurer  and the apploval of the Appropriate  Commission  obtained,  as per the provisions of the PPA or Regulations.

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- (c) FSA shall be signed with the successful bidders after the terms and conditions  for signing  of FSA are met and the Appropriate Commission  has approved  the amendment or supplement  to the PPA.
- (iii)  CIL/SCCL  may grant future coal linkages  on auction basis for power producers/lPPs without PPAs that are either commissioned  or to be commissioned.  All such  power producers/lPPs  may participate  in this auction and bid for premium above the notified price of the coal company. The methodology for bidding of linkages  shall be similar to the bidding methodology in the policy on auction of linkages of Non-Regulated  Sector dated 15.02.2016.  Coal drawa/ will be permitted only against valid long term and medium term PPA with Discoms/State  Designated Agencies (SDAs), which the successful bidder shall be required  to procure  and submit within two  years of completion of auction  process.
- (a) ln case of the commissioned capacities, FSA shall be signed with the successful bidders  after completion  of the auction  process provided that the standard  terms and conditions for signing  of FSA are met. ln case of others, a Letter of Assurance  (LoA) may be issued by CIL/SCCL to the successful  bidder and FSA shall be signed  after commissioning  of the unit and fulfilling other conditions  of the LoA.
- (b) Further, if the  power producer/lPP,  does not start drawing  the coal within two years of submission  of the PPA, the FSA or the LoA, as the case may be, shall stand term inated.
- (iv) coal linkages may also be earmarked  for fresh PPAS, by  pre-declaring the "vailability of coal linkage  with description,  to the States.  States may indicate these linkages  to Discoms/SDAs.
- l. The StatesiDiscoms may, based on such linkages, undertake tariff based competitive  bidding for long-term  and medium-term procurement of power. as per ihe  guidelines -iss ued by Ministry of  power  and may recommend  grant of ihese linkages to successfui  bidders.  ln case of the commissioned  capacities, FSA shall bie signed with the successful bidder after completion of the auction process. ln caie of the likely to be commissioned  capacities, a Lltter of h..uiun"u may be issued Oy ilI\_ISCCL to the successful bidder and FSA shall ne sig;eO  on ctmmissioning  of the unit. The successful  bidder shall be required to mEet the conditions splcified  in the Letter of Assurance and FSA. The existing FSA/LoA  holders may also  participate. in the competitive  bidding  for ppA  and, if successful, shall iurrender  proportionate  quantity of the FSA'/LoA for the corresponding tenure; or
- ll.TheStates/Discomsmayrecommendgrant.oftheearmarkedlinkagesto capacities that are cover;d  under exceptlons  and  proviso clauses of paru,5-2 of ihe Tariff  policy  dated 28.01.2016.  A Letter of Assurance may be issued by clL/SCCLtosuchcapacitiesandFsAshallbesignedoncommissioningof the unit.

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## Copy to:

- 1 Secretary,  Ministry of  power,  Shram  Shakti  Bhawan,  New Delhi.
3. CEO, NtTl Aayog,  yojana  Bhawan,  New Delhi.
- z secretary,  Department  of Economic  Affairs, Ministry of Finance, North Brock, New Delhi.

## provided

- Q)  rne priority  between (iv) r and (iv) il above wiil be decided  by the state Government  concerned considering  its pubric  interest  and baied on rts requirements.
2. !b) -fne quantity  remaining  unutilized  for 2 years continuously  shall lapse. Detailed poricy guiderines  for sub para (iv) shail be formuratbd by Ministry  of Power.
3. (v) Power  requirement  of group  of states  can arso be aggregated  and procurement  of such aggregated power can be made by an agency  aesiiiat6o by Minrsiry oi  po*",. o,authorized  by such states on the basis  of tariff based -uiooing.  'coar rin[rgu,  ;iil uu earmarked  for such agencies.by pre-decraring  the avairabirit-y  of coar iiifage witn description,  based on which such agency will un-dertake tariff based competitive-oiooing for long-term and medium-rerm  rsrocurement of power and recommend grant of these linkages  to successful brdders.  The methodology in this regard  shail be formurated  by Ministry of Power.
4. 1x1.,.  iiik's"r shall be granted  for fufl normative  quantity  to speciar  purpose  Vehicre (Dr'-v) rncorporated  by nominated  agency for setting up Ultra Mega  power projects (UMPP)  under Central Government  initiaiive  througn" tariff based  iompetitive  biioing under the guidelines  for determination  of tariff,  on'ihe ,e.ommendation  of MinLtry  of Power.
5. (vii) Ministry of coal in consurtation  with Ministry  of  power  may, subject  to the availability  of coal and the condition that such suppiy does not advlrsely impact the availability  of coal for prants  based  on domestic coar, iormurate  a detaired methodorogy :|.1,,,:::1Tl!liddils p.ro-ce-ss  for ailocatins  coat tinkages  to tpps, having  ppAs oased on rmported  coar, with ful pass through of cost savrng to consumers.  Furtier, the successful  bidder  would not be alowed lJcraim  any upwird  revision  in the tariff on account of such coal linkages.
6. ?., .Sinc\_e the Competent  Authority has approved  lhe proposal  of Coal linkages Allocalion  Policy  for  power  se-ctor as mentioned in  fara r atove, poricy griJ"rinu,  ir" circulated  to all concemed  for further  action.  The action  iaten report shair 6" ""ntio tni. Ministry from time to time.

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Under Secretary  to the Govt. of lndia

4. Chairman,  Railway Board,  Rail Bhawan,  New Delhi
6. Secretary, Department  of lndustrial Policy and  promotion, Delhi Udyog Bhawan, New
5. Secretary,  Ministry of Steel, Udyog Bhawan,  New Delhi
7. Secretary, Ministry  of Law and Justlce, Department  of Legal Affairs, Shastri Bhawan,  New Delhi
9. Secretary,  Ministry of Mines, Shastri  Bhawan,  New Delhi
- B. Secretary, Ministry of Chemicals  and Fertilizers,  Department of Fertjlizers
10.  Secretary, Department  of Financial Services,  Jeevan  Deep Building New Delhi.
11.  Prime Minister's Office, (Kind Attn. - Shri A. K. Sharma, Joint Secretary), South Block, New Delhi.
9. Cabinet Secretariat (Kind Attn.  -  Shri S. G. P. Verghese, Director),  Rashtrapati Bhawan, New Delhi. 12.
10. Director  (Marketing),  Coal lndia Ltd. Kolkata,  Coal Bhawan,  New Town, Rojarhat, Kolkata-700156. 13.
11. EDlCoal  Movement, SCCL, PB No. 18, Red Hills, Khairatabad,  Hyderabad, 14. Telengana
16.  Chairman, Central EJectricity  Authority, Sewa Bhawan, R.K. Puram, New Delhi.
13. '15. CMD, CMPDI, Gondwana Place, Kanke Road, Ranchi, Jharkhand.

## Copy also to:

## Chief Secretaries  of all States/UTs

## Copy for information  to:

1. OSD to MoS(UC), Coal,2.PS  to MoS (l/C), Coal, power  & N&RE,3. PSO to Secretary,  Ministry of Coal, 4.PPS to Additional Secretary,  Ministry  of Coal, 5. Sr. PPS to Joint Secretary (RPG), Ministry of Coal, 6. PS to JS(VB), Ministry of Coal, 7. PPS to JS (RKS), Ministry of Coal, B.PS to JS & FA, Ministry  of Coal, 9. PS to Adviser (Projects), Ministry  of Coal, 10. PS to Economic Adviser, Ministry of Coal,  'l  1.PS to Director,  CPD, Ministry of Coal, 12. Shri G.K. Vashishtha,  GM(S&M),  CtL, Laxmi  Nagar, Delhi.

Copy  to Director,  NlC, M/o Coal with the request to place  the same on the website of this Ministry.

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Under Secretary to the Govt. of lndia

To

## F.No. CLD-28 o2a  I  tO  I 20ta\_CLD\_part{  U Governmen of India Ministry of Coal

Shastri Bhawgn, New Delhi

Dated the/h{arch, 2Ot9

## *****

- I. Chairman-cum-Managing  Director,
2. Coal India Limited, Coal Bhawan, New Town, Rajarhat,  Kolkata  -  70O 156
3. IL Chairman-cum-Managing  Director, SCCL, PB No. 18, Khairatabad, Hyderabad, Telangana

Subjectr  Signing of Fuel Suppty Agreement  IFSA) with Letter of Assurance  (LoA) holdets  of rhermal  power plants  -  Fading Away of the gxislilq  LoA  -  l.!4 Regime and Introduction of a New Mori Traisparent c\_oal Allocafion Policy for  power  sector, 2c17  -  sHAxrI (scheire  for

Harnessing and Nlocating  Koyala (Coalf Transparently  in fniiaf

Sir,

I am directed  to say that the cabinet committee on Economic Affairs (ccEA) on o7.03.2019  had considered  the Note from the Ministry  of  power  on the recommendations of Group of Ministers (GoM) constituted to examine the specific  recommendations  of High Level Empowered  Committee (HLEC) constituted to address the issues of Stressed rhermal  power projects  and has approved the following amendments in the  policy  on 'signing of Fuel Supply Agreement (FSA) with retter of Assurance (LoA) holders of rhermar Power Plants  -  Fading Away of the eisting l,oA  -  FSA Regime and Introduction  of a New More Transparent  coal Allocation  policy  for  power Sector, 2017  -  SHAKTI  (Scheme for Hamessing  and Allocating Koyala (coa1) Transparently  in  India)' issued  by Ministry  of coal vide letter no. 23O 1 1  /  15  /  2O1  6-CPD/CLD dated 22.O5.2O t7 :

I.  Following  is added at the end of first para of B (ii) of shakti  policy,  after the words "with PPAs".

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- (i) The power plants which were having valid already  concluded  Long Term PPA, based on domestic  coal on or before 17  'O5'2O17  and who could not participate in the linkage auctions under SHAKTI  B (ii) due to any reason,  may be allowed  to participate  in the B (ii) auctions  of SHAKTI scheme.
- (ii) Bidders  who have already participated  in SHAKTI B (ii) auctions and could not secure linkage for the full ACQ, may obtain the linkage for the balance  quantity also by participating in future auctions  at a later stage under B (ii) after benchmarking  discount.
- II.  At the end of Para process', following  words regular  intervals". B (iii) of Shakti Policy, after the words 'auction are added: "Such auctions/bids  shall be held at
- III. The following  clause  is added after clause  B (vii) of SHAKTI Policy:

B (viii): Notwithstanding  anything  in the foregoing paras, it is further provided as follows:

- a) A11 such power plants including  private generators  which do not have PPAs, shall be allowed Coal linkage under B (iii) and B (iv) of Shakti  Policy for a period of minimum 3 months upto a maximum of I year, provided further that the power  generated through that linkage is sold in Day Ahead Market (DAM) through  power exchanges or in short term through a transparent  bidding process through Discovery of Efficient  Energr Price (DEEP) portal' A methodolory  in this regard shall be formulated by Ministry of Power in consultation with Ministry of Coal.
- b) A generator which terminates PPA in case of default in payment  by the DISCOM, may be allowed to use existing linkage coal for sale of power through short-term  PPAs using DEEP portal or power exchange for a period of maximum  2 years or until they find another buyer of power under long/medium  term PPA whichever is earlier' Adequate

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k.*

safeguards  to be put in place.

- c) The provision of para B(v) of Shakti Policy above shall also be applicable  in cases where the nodal agency designated by Ministry  of Power aggregates  /  procures  the power requirement  for a group of states even without requisition from such states.
- d) Central and State generating companies cal act as an aggregator  of power of such stressed power assets and procure it  through transparent  bidding process and offer that power to the DISCOM against  their existing  PPAs to such DISCOMS,  till such time their own plants get commissioned. Central  and State generating companies may be allowed to use the edsting unutilized Bridge Linkages for such stressed power assets provided they meet other parameters of tolling guidelines  including competitive bidding.
- e) In all cases where provisions  of B(viii)(a)(b)(c)  and (d) above are utilized, net surplus after meeting  operating  expenses generated in this manner shall be entirely used for servicing debt in the first place' MoP will work out in consultation with DFS  -  a mechanism  to ensure this.
2. T}ae above amendments  in SHAKTI Policy, 2Ol7 is circulated to all concerned for further action. CIL and its subsidiaries and SCCL are advised to take further action accordingly.

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You6s laithfullY,

l/

A\d,d<lr^

(Suje{$ Kumar)  |  t'

Under Secretary  to the Government of India

## Copy to:

1. Secretary, Ministry  of Power, Shram Shakti Bhawan, New Delhi
2. Secretary, Department  of Economic  Affairs,  Ministry of Finance, North Block, New Delhi
3. CEO, NITI Aayog, Yojana Bhawan, New Delhi
4. Chairman, Railway Board, Rail Bhawan, New Delhi
5. Secretar5r, Ministry  of Steel, Udyog Bhawan, New Delhi
6. Secretary, Department  of Industrial Policy and Promotion, Udyog Bhawan, New Delhi
7. Secretar5r, Ministry of Law and Justice, Department  of Legal Affairs, Shastri Bhawan, New Delhi
8. Secretar5l,  Ministry of Chemicals and Fertilizers,  Department  of Fertilizers
9. Secretary, Ministry  of Mines, Shastri Bhawan, New Delhi
10. 10.Secretary,  Department  of Financial Services, Jeevan Deep Building, New Delhi
11. ll.Prime Ministers Office, South Block, New Delhi
12. l2.Cabinet  Secretariat  (Kind Attention:  Shri S. G. P. Varghese,  Director), Rashtrapati Bhawan, New Delhi
13. l3.Director (Marketing), Coal India Limited, Coal Bhawan, New Town, Rajarhat, Kolkata
14. L4.ED/Coal  Movement,  SCCL, PB No. 18, Red Hills, Khairatabad, Hyderabad, Telangana
15. 15.CMD, CMPDIL,  Gondwana  Place, Kanke Road, Ranchi, Jharkhand
16. 16.Chairman,  Central Electricity Authorit5r, Sewa Bhawan, R.K  puram, New Delhi

## Copy also to:

Chief Secretaries  of all States  /  UTs

## Copy for information  to:

1. PS to Minister  of Coal
2. PSO to Secretar5r, Ministry  of Coal
3. PPS to Additional Secretary,  Ministry of Coal
4. PPS to Nominated Authority  /  JS (AU), Ministry  of Coal
5. PPS to JS (RKS)  ,  Ministry  of Coal
6. PPS to JS & FA, Ministry of Coal
7. PS to JS (VT)  ,  Ministry  of Coal
8. PS to JS (BPP), Ministry  of Coal
9. PS to Economic Advisor, Ministry of Coal
10. 10.PS to Advisor  (Projects), Ministry of Coal
11. 11.PS to DDG, Ministry of Coal
12. 12.PS to Director (CLD), Ministry of Coal

Copy to Director, NIC, Ministry of Coal  -  with the request to upload it on the website of Ministry of CoaI