Government revises SHAKTI Policy to boost coal allocation with greater transparency

With the implementation of the Revised SHAKTI Policy, 2025, the government aims to reinforce energy security, support the coal sector’s growth, and meet the rising power demands of a rapidly developing nation.

In a significant policy update aimed at strengthening coal allocation to the power sector, the government has unveiled the ‘Revised SHAKTI Policy, 2025’, marking a major step toward enhancing efficiency, flexibility and transparency in the coal supply process. The policy overhaul announced by Union Minister of Coal and Mines G. Kishan Reddy in a written reply in the Rajya Sabha, is set to streamline coal linkages and catalyse capacity growth across India’s thermal power sector.

The new framework simplifies the allocation process by merging multiple existing windows into just two simplified channels:

Window I: Allocation of coal linkages to Central and State Government-owned power generation companies (GENCOs) at Notified Price.

Window II: Allocation to all GENCOs, including private sector players or Independent Power Producers (IPPs), at a premium above the Notified Price.

The revised policy expands the scope of the original SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy of 2017 by making coal access more inclusive and market-driven. It encourages competition, ensures optimal capacity utilisation and is expected to deliver affordable power to consumers while promoting pithead thermal power capacity additions especially near coal mines.

According to the Ministry of Coal, this revised structure is designed to provide equitable and transparent access to coal for all power producers, regardless of ownership. It also aims to boost coal availability and increase mining operations in coal-rich regions. This surge in activity is likely to generate higher revenues for state governments, creating opportunities for regional development and improved livelihoods for local communities.

To ensure uninterrupted coal supply to thermal power plants, the supply chain is closely monitored by a dedicated Inter-Ministerial Sub-Group comprising representatives from the Ministries of Power, Coal and Railways along with the Central Electricity Authority (CEA), Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL). This group meets regularly to make key operational decisions.

Further, an Inter-Ministerial Committee (IMC) has been established to oversee broader issues related to coal supply and power generation. The committee includes top officials from the Ministry of Coal, Ministry of Power, Ministry of Environment and the Railway Board with the Secretary of the Ministry of New and Renewable Energy and the Chairperson of the CEA serving as special invitees when needed.