Cabinet approves fresh coal linkages to boost procurement and capacity addition by thermal plants amid high power demand | Mint

New Delhi: The cabinet committee on economic affairs (CCEA) on Wednesday approved fresh coal linkages in a revised SHAKTI policy to reduce import dependency and increase capacity addition by thermal power plants.

The union cabinet also approved an academic and infrastructure capacity increase for five IITs (Indian Institute of Technology), upgradation of the National Scheme for Industrial Training Institute (ITI) and setting up of five National Centres of Excellence (NCOE) for Skilling as a centrally sponsored scheme.

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The new SHAKTI policy, which stands for Scheme for Harnessing and Allocating Koyala Transparently in India, will help thermal power generators procure coal for long-term use with some procedural easement compared with the previous iteration of the same policy.

The policy, first announced in 2017, has been implemented in 2019 and 2023, before its latest revision on Wednesday.

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The new policy will allow thermal power generators to procure coal in two windows. The first window will be for coal linkages to central government generator companies and states at notified prices, while the second window will offer linkages to all generator companies at a premium above the notified price, a CCEA statement said, adding that state-run Coal India Ltd and Singareni Collieries Co. Ltd would receive directions to implement the policy.

The new policy is also expected to reduce coal imports and may push the setting up of greenfield thermal power projects at pithead sites, a CCEA statement said. Pithead sites are those which are nearer to the coal source.

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“It (the new SHAKTI policy) will enable thermal capacity addition, reduce dependency on imported coal, and strengthen the country’s energy self-reliance,” said Rohit Bajaj, joint managing director, Indian Energy Exchange. 

“Further, allowing sale of un-requisitioned surplus power under PPAs in power markets will increase liquidity on exchanges and will present an opportunity for DISCOMs and C&I consumers to meet their demand efficiently and at competitive rates,” he added.

The CCEA’s decision comes at a time when India’s power demand has been hitting record-high levels for the past three years due to industrial revival after the pandemic as well as rising global temperatures. The peak power demand this year is expected to reach an all-time high of 270 gigawatt (GW) surpassing the previous high of 250GW registered on 30 May 2024.

The cabinet on Wednesday also approved the infrastructure and academic expansion of five IITs in the country, with an outlay of with an outlay of over ₹11,800 crore over four years from FY26 to FY29. The plan is expected to increase the student strength in these five IITs—Tirupati, Palakkad, Bhilai, Jammu and Dharwad—by 6,500 in this period, the cabinet statement said.

The cabinet also approved the creation of 130 professor-level faculty posts in these IITs, the statement said, adding that five new research parks will also be created to foster industry-academia collaboration.

Cabinet also approved the National Scheme for Industrial Training Institute (ITI) and the creation of five COEs after an announcement was made in the budgets for FY25 and FY26, a press statement said. The total outlay for this would be ₹ ₹60,000 crore, with the centre financing half, states providing ₹20,000 crore, and industry providing ₹10,000 crore, as well as co-financing by multilateral banks such as Asian Development Bank and the World Bank, as per the statement.

The scheme will upgrade 1,000 government ITIs aiming to skill 2 million youth over a five-year period, the statement said.

“The financial assistance provided under various schemes in the past was suboptimal to meet the full upgradation needs of ITIs, particularly in addressing growing investment requirements for infrastructure upkeep, capacity expansion, and the introduction of capital-intensive, new-age trades,” the statement said, adding that funding will now be on a need-based investment basis.

For the first time, the upgradation of ITIs will also adopt an industry-led Special Purpose Vehicle (SPV) model, the statement said.