The Ministry of Power, in collaboration with the Ministry of Coal, has revised the methodology for the allocation of coal to power plants as per the provisions outlined in Para B(viii) (a) of the SHAKTI Policy. This revised methodology was notified on March 15, 2024.
This initiative aims to streamline the process of coal allocation for short-term use, ensuring efficient management and distribution of this vital resource.
Auction of coal linkages will be conducted under three distinct windows, each catering to different delivery periods: 3 months, 6 months, and 12 months respectively. To facilitate transparency and accessibility, coal companies such as CIL/SCCL will identify specific areas/mines within their subsidiaries earmarked for allocation under these guidelines. This information will be published on e-auction websites well in advance of each auction, detailing the quality and quantity of coal available, as well as the proposed supply schedule.
The auctions will follow a periodic schedule to accommodate the dynamic requirements and demand variations in the short term, including power exchanges. An annual calendar will be published on the Coal Companies’ websites, indicating the months earmarked for auctions. Importantly, the expenses associated with conducting these auctions will be recovered by CIL, ensuring minimal financial burden on stakeholders.
Participation in the auctions is open to all power plants meeting specific eligibility criteria. This includes plants without Power Purchase Agreements (PPAs), those with expiring PPAs, or those with signed but inactive PPAs. The effective date of a PPA shall be determined either by its adoption by the appropriate Regulatory Commission or by the commencement of power supply as per the PPA, whichever is later.
The quantity of coal linkage a power plant may bid for will be determined based on its heat rate, not exceeding 2600 kCal/kWhr for the untied capacity of the plant. The Central Electricity Authority (CEA) will oversee the application process and publish a list of eligible plants along with their heat rates and capacities. Coal linkage quantities will be capped at the amount necessary to operate the untied capacity of the power plant at 85% Plant Load Factor (PLF) for the duration of the coal linkage.
This methodology marks a significant step forward in ensuring fair and efficient allocation of coal resources, promoting transparency, and addressing the short-term needs of power plants across the nation.
