Lok Sabha Question No. 121 (STARRED), answered on 2021-07-28
Subject: SHAKTI Policy
Ministry: COAL
Asked by: Y. S. Avinash Reddy

## GOVERNMENT OF INDIA MINISTRY OF COAL

## LOK SABHA STARRED QUESTION NO.*121

## TO BE ANSWERED ON 28.07.2021

## SHAKTI Policy

## *121. SHRI Y.S. AVINASH REDDY:

## 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 the country; (b) the main features of SHAKTI policy and the current status of its implementation in the country; (c)  the list of States currently eligible under SHAKTI policy; (d)   whether  SHAKTI  policy  has  been  transparent  and  has  helped  to  address  the coal linkage problems of all the 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 under the said scheme in Andhra
- Pradesh?

## ANSWER

## MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI)

- (a) to (f):     A statement is laid on the table of the House.

## Statement referred to in reply to parts (a) to (f) of Lok Sabha Starred Question No. 121 for answer on 28.07.2021 asked by SHRI Y.S. AVINASH REDDY.

(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.  The  main  features  of  the  SHAKTI  Policy  (as  detailed  under  its various Paras) are as under:

Para  A: FSA  may  be  signed  with  pending  LoA  holders  after  ensuring  that  the plants are commissioned, respective milestones met, all specified conditions of the LoA  fulfilled  within  specified  time  frame  and  where  nothing  adverse  is  detected against  the  LoA  holder.  Further,  it  has  allowed  continuation  of  the  existing  coal supply  to  the  capacities  of  about  68,000  MW  at  the  rate  of  75%  of  Annual Contracted  Quantity  (ACQ),  which  may  further  be  increased  in  future,  based  on coal availability. The policy has enabled coal supplies at 75% of ACQ against FSA to about 19,000 MW capacities, which have been delayed in commissioning, provided these  plants  are  commissioned  within  31.03.2022.  The  medium  term  Power Purchase  Agreements  (PPAs)  to  be  concluded  in  future  against  bids  invited  by DISCOMS have also been made eligible for linkage coal supply.

Para B (i): The Coal India Limited (CIL)/ the Singareni Collieries Company Limited (SCCL) may grant coal linkages to State/Central Gencos/Joint Ventures at notified price on the recommendations of the Ministry of Power.

Para  B  (ii): Linkages  to  Independent  Power  Producers  (IPPs),  having  Long  Term PPAs  based  on  domestic  coal,  where  IPPs,  participating  in  auction,  will  bid  for discount on the tariff (in paise/unit). The bidders, who could not participate in the linkage auction under B (ii) due to any reason, may be allowed to participate in the B (ii) auctions of this policy. Further, the bidders, who could not secure linkage for full  ACQ,  may  obtain  linkage  for  the  balance  quantity  by  participating  in  future auctions at a later stage under B (ii) after bench marking discount.

Para B (iii): Linkages to IPPs/ Power Producers without PPAs shall be on auction basis.

Para B (iv): Coal linkages may also be earmarked for fresh PPAs, by pre-declaring the  availability  of  coal  linkage  with  description,  to  the  States.  The  States  may indicate these linkages to DISCOMS/State Designated Agencies (SDAs).

Para  B  (v): Power  requirement  of  group  of  States  can  also  be  aggregated  and procurement  of  such  aggregated  power  can  be  made  by  an  agency,  designated by the Ministry of Power or authorized by such States on the basis of tariff based bidding.

Para  B  (vi): Linkages  shall  be  granted  for  full  normative  quantity  to  Special Purpose Vehicle (SPV) incorporated by nominated agency for setting up Ultra Mega Power Projects (UMPPs) under Central Government initiative through tariff based competitive  bidding  under  the  guidelines  for  determination  of  tariff,  on  the recommendation of the Ministry of Power.

Para B (vii): The Ministry of Coal, in consultation with the Ministry of Power, may formulate  a  detailed  methodology  of  a  transparent  bidding  process  for  allocating coal linkages to IPPs, having PPAs, based on imported coal with full pass through of cost savings to the consumers.

## Para B (viii):

- (a) Power plants with no PPAs are allowed coal linkage under B (iii) & B (iv) for a period of minimum 3 months upto a maximum of 1 year for sale of power generated through the linkage in Day Ahead Market (DAM) through power exchanges or in short term through Discovery of Efficient Energy Price (DEEP) portal.
- (b) Use of the existing coal linkage for sale of power through short term PPAs using DEEP portal or power exchange by the generator, which terminates PPA in case of default in payment by the DISCOM, for a maximum period of 2 years or until they find another buyer of power under long /medium term PPA, whichever is earlier.
- (c)  Coal  linkage  under  B  (v)  is  also  applicable  in  cases,  where  the  nodal  agency designated by the 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 can act as an aggregator of power of stressed power assets.
- (e) Mechanism to ensure servicing of debt.

As  of  now,  coal  linkages  to  the  following  capacities  have  been  granted  under various Paras of the policy:

- (i) Clearance has been given for signing of Fuel Supply Agreement (FSA) to 9 LoA holders  with  a  total  capacity  of  7,210  MW  under  provisions  of  para  A(i) of  SHAKTI policy.
- (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. In  the  second  round  conducted  in  May,  2019  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,  6.48  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) 6 tranches of Linkage Auction have been conducted by Coal India Limited under B(viii)(a) of  SHAKTI  Policy. Out  of  total  offered  quantity of  32.02  MT  of Coal, 4.85 MT have been booked by successful bidders.

(c): All  the  Generating  companies  of  States  and  Union  Territories  are  eligible  for coal linkage under SHAKTI Policy, subject to terms and conditions mentioned in the Policy. (d) & (e): SHAKTI Policy is a transparent way of allocating coal to the Power Plants including stressed power plants. An Inter-Ministerial Committee (IMC) consisting of various  concerned  Ministries  /  Departments  like  Ministry  of  Power,  Ministry  of Railways, Central Electricity Authority and the coal companies have been constituted  to  formulate  methodologies  prescribed  under  the  provisions  of  the SHAKTI Policy as well as to make recommendations on issues that are arising or are likely to arise during the course of implementation of the SHAKTI Policy. IMC provides a platform for consultation with the concerned Ministries / Departments and  the  coal  companies  for  smooth  implementation  of  the  provisions  of  SHAKTI Policy. Further, coal linkages to Independent Power Producers are granted either by way of transparent auction mechanism or are earmarked to State(s) for granting the  coal  linkages  based  on  tariff  based  bidding  of  Power  Purchase  Agreements (PPA). SHAKTI Policy is a scheme for allocation of coal linkages to the Power Plants. NTTPS  St  -  V  (800  MW),  Damodaran  Sanjeevaiah  Stage-II  (800  MW)  and Rayalseema  Unit  -  6  (for  additional  100  MW)  thermal  power  plants  of  Andhra Pradesh have been allocated coal linkages under provisions of Para B (i) of SHAKTI

****

(f): Policy.