Power Ministry revises SHAKTI coal auction to improve Coal supply

Move aimed at making more coal available to power plants that do not have PPA; ministry plans three separate windows for auction

In order to make more coal available to power plants that do not have any power purchase agreement (PPA), the union power ministry agreed to changes in the guidelines for SHAKTI scheme.

SHAKTI, or Scheme for Harnessing Scheme for Harnessing and Allocating Koyala Transparently in India, was launched in 2018 to provide coal to stressed power units which lack coal supply.

The power ministry in a meeting with Association of Power Producers (APP), the representative body for private gencos, agreed to three separate windows for auction--3 months, 6 months and one year.  

"In order to make coal available for a longer period, MoP will examine whether the duration of auction can be extended for more than one year. Issue of Bank Guarantee is also to be examined if duration has to be extended beyond one year," said a statement by the ministry.

In the earlier two rounds held over the last two years, around 9,389 megawatt (MW) of power capacity bid for the coal under the SHAKTI scheme. During the last round in February, private power players had alleged that Coal India was offering less than the required amount of coal.

In the bidding round for medium-term PPAs for assets that don’t have any sale agreement, six projects received an interest from four states to buy power for three years at Rs 4.24 per unit.

The union ministry in turn asked the private gencos to cooperate with the the central government owned gencos when power is regulated to the defaulting states. "MoP advised IPPs on reciprocal basis not to derail the regulation of power by Central Gencos in case of non-payment of dues by Discoms," said the statement.

APP also asked the ministry for amendments in the 'Mega Power Policy' which the MoP said is being taken up through inter-Ministerial consultation.

'Mega power policy' is for projects over 1,000 Mw and was to expire on March 31, 2017, but the CCEA extended it by five years. Thereby doubling the period to 10 years for projects to receive the 'mega power' certificate.

The incentives provided in the scheme are lower customs duty and excise duty exemption for equipment.