Under Shakti scheme, India’s power ministry agrees to 3 coal auction windows

Providing relief to about 8,500 mega-watt (MW) of power plants without power purchase agreements (PPAs) which rely on auctions conducted under the Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India (SHAKTI scheme) by the government, the Union power ministry has agreed to allow generating stations to procure fuel under the scheme through three different auction windows.

Under existing norms, there is only one window for Shakti auctions through which power plants can book coal for three months to one year. According to a statement issued by the government on Friday, power ministry has agreed for three separate windows for Shakti auction: for three months, six months and one year.

“The new arrangement agreed upon by the power minister will provide the flexibility to developers to plan their fuel purchase and electricity sales in the deep portal or the spot markets,” Ashok Kumar Khurana, director general, Association of Power Producers (APP), told Financial Express.

The Shakti scheme is seen as one of the major initiatives by the government which is hand-holding some power plants to come out of stress. The original version of the scheme, launched in 2017, allowed coal supply only to power generation capacities with long-term and mid-term PPAs.

In 2019, the coal ministry amended the eligibility norms for the scheme, effectively allowing power plants without PPAs to apply for coal linkages, provided electricity generated from this coal is sold through spot power exchanges or through the government’s ‘DEEP’ portal, where bidding is conducted for bilateral short-term electricity supply. Plants need to submit PPAs to the government within two years after Shakti coal auction. Due to lack of PPAs in the market, APP has requested for extension of time line for PPA submission and the power ministry “agreed to examine the request in consultation with ministry of coal”.

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