SHAKTI Scheme

Why in News ? Govt in talks to revamp SHAKTI policy for coal linkage process

What is SHAKTI Scheme ?

The Shakti Scheme, also known as the Scheme for Harnessing and Allocating Koyla (Coal) Transparently in India, is a policy implemented by the Ministry of Power in India.

Key Features:

Transparent Coal Allocation: The scheme aims to move away from an opaque allocation system and introduce a more transparent mechanism for coal linkage to thermal power plants.

Auction-Based System: A key feature is the introduction of auctioning for coal linkages, ensuring a fair and competitive process for all participants.

Fuel Supply Agreements (FSAs): Power plants with Letters of Assurance (LoAs) can sign FSAs after meeting specific milestones and fulfilling all conditions within the stipulated timeframe.

Power Purchase Agreements (PPAs): Coal linkage for future projects will be determined based on competitive bidding of tariffs through Power Purchase Agreements (PPAs).

Objectives:

Ensuring Coal Availability: The primary objective of the Shakti Scheme is to ensure a reliable and transparent supply of coal to thermal power plants across the country. This helps to address issues of power shortages due to coal scarcity.

Optimizing Coal Allocation: The scheme aims to optimize the allocation of coal resources by ensuring it reaches power plants that need it the most.

Promoting Efficiency: By introducing competition through auctions, the scheme incentivizes power plants to operate more efficiently.

Benefitting Public Sector Banks: By ensuring a steady supply of coal and improving power plant operations, the scheme indirectly benefits public sector banks by reducing the risk of bad loans from the power sector.

Reduced Dependence on Imports: Increased domestic coal availability can potentially lead to a reduction in India’s dependence on imported coal.

• Policy directions are supposed to be issued by the Ministry of Coal and Ministry of Power. The Coal India Limited/Singareni Collieries Company Limited and different power entities of the State and Central Government are responsible for the implementation of the policy.