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linkages would be awarded to designated state-owned power DIS- rationalisation of Coal linkages, including swapping of imported coal
COMs. The state through DISCOMs then award coal linkage according being transported to hinterland with domestic coal transported near
to applicant’s need, efficiency and cost of power to the power plants coastal areas.
in its territory including the private sector. Allocation to private sec-
tor will be made through auction. opportunities

SHAKTI – the new coal linkage policy: The Scheme for Harnessing Coal is a low-cost fuel for power generation in India. According to NITI
and Allocating Koyla (Coal) Transparently in India (SHAKTI) was Aayog’s Draft National Energy Policy 2017 report, coal-based power
announced in May 2017. The objective was to allocate coal linkages generation capacity is likely to reach 330-441 GW by 2040 from 192
(buying coal from a mine closer to the power plant) to the regulated GW in FY 2017.
sectors in a transparent and objective manner. The Policy provides
coal linkages to power plants, which lack Fuel Supply Agreements Conclusion
(FSAs) through coal auctions.
The auctioning coal linkages through SHAKTI have given consum- India largely depends on imported coal and steps to reduce coal im-
ers the option to bid for a source of their choice, thereby reducing ports and smooth development of coal mines need to be taken. Some
coal transportation costs. The policy is an important initiative in al- of them are:
leviating one key challenge in power sector, viz. lack of coal linkage • Promote international collaborations for bringing in techno-
and is expected to positively contribute in resolution of a number of logical up-gradations in the sector, which in turn would en-
stressed assets. sure investment in the sector from various countries.
The coal ministry has amended the eligibility norms for the SHAK- • Establishing a single window clearance process for coal
TI transparently in India, effectively allowing more power generating mines
companies to procure the fuel through this route. Ministry will soon • Support in land acquisition and Resettlement and Rehabil-
launch the second round of SHAKTI scheme. itation (R&R) related issues to ensure timely and smooth
completion.
Coal Linkage Policy for non-regulated sector: The coal supply to • The Government has now decided to permit 100% FDI under
Non-Regulated Sector (NRS) is through FSAs based on their long-term automatic route for sale of coal, for coal mining activities
linkage /Letter of Assurance (LoA). According to this policy, all allo- which would fully open up coal mining to foreign players.
cations of linkages/LOAs for non-regulated sector viz. Cement, Steel/ • Establishing a coal regulator to resolve the conflicts and set-
Sponge Iron, Aluminium and others [excluding fertilizer (urea sec- tle disputes related to coalmines. The coal regulator will also
tor)] are auction based. Proportion of coal allocation between power help in monitoring performance of coal miners and utilising
and non-power sectors is 75% Power and 25% Non-power. capacity.
Coal India Ltd has been conducting linkage auctions under Non-Reg-
ulated Sector, including for Steel, Cement & Sponge Iron, and FSAs are
signed with the successful bidders by the subsidiary coal companies
of CIL. In the case of steel PSUs, coal supplies through MoU are made
to SAIL and RINL.

Rationalisation of Coal Linkage: Ministry of Coal has issued the Pol-
icy for Linkage rationalisation for IPPs in 2018, which started with
rationalisation of linkages of State/ Central Gencos. As per this policy,
CIL has rationalised for a quantity of 5.42 MT for State/Central Gencos 1 World Coal association
with a potential savings of INR 292 Crores (USD 41.3 mn) which is un- 2 Provisional Coal Statistics
der the process of implementation. There is also possibility of further 3 Ministry of Coal

EnErgising sustainablE & ProsPErous FuturE 51