Coal Supply Boosted Amid Record Production
The Indian government has announced significant changes to coal supply regulations for thermal power plants, transitioning from the New Coal Distribution Policy (NCDP) to the Shakti Policy. This shift aims to ensure that coal companies meet the full Power Purchase Agreement (PPA) requirements for existing linkage holders, regardless of previous limitations. With coal production reaching an all-time high, the government is focused on enhancing domestic coal availability to support the energy sector.
Transition to the Shakti Policy
In 2022, the Indian government decided to replace the provisions of the New Coal Distribution Policy (NCDP) with the Shakti Policy, which was introduced in 2017. Under this new framework, coal is supplied based on the commercial terms outlined in the Fuel Supply Agreement (FSA) between coal companies and power plants. This policy change allows coal companies to provide coal to meet the full PPA requirements of existing linkage holders, irrespective of the Annual Contracted Quantity (ACQ) levels. This flexibility is crucial for power plants to operate efficiently and meet energy demands.
Additionally, coal is available through Single Window e-auctions, which cater to various sectors, including power generation. The pricing of coal under the FSA is determined by commercial terms and notifications issued by major coal producers like Coal India Limited and Singareni Collieries Company Limited. This structured approach aims to stabilize coal supply and pricing in the energy sector.
Record Coal Production in 2023-24
The year 2023-24 marked a historic milestone for India’s coal production, reaching an impressive 997.826 million tonnes (MT). As of February 2025, provisional figures indicate that production for the current year stands at 929.15 MT, reflecting a growth rate of 5.45% compared to the same period in the previous year. This surge in production underscores the government’s commitment to enhancing domestic coal availability and reducing reliance on imports.
To further bolster coal production, the government has implemented several initiatives aimed at improving operational efficiency and increasing output. These measures include regular reviews by the Ministry of Coal to expedite the development of coal blocks and the enactment of the Mines and Minerals (Development and Regulation) Amendment Act, 2021. This legislation allows captive mine owners to sell a portion of their production in the open market, thereby increasing overall coal availability.
Government Initiatives to Enhance Coal Availability
The Indian government has introduced a series of initiatives to ensure adequate coal availability and boost production. Key measures include the establishment of a Single Window Clearance portal to streamline the operationalization of coal mines and the creation of a Project Monitoring Unit to assist coal block allottees in obtaining necessary approvals. Additionally, the auction of commercial mining on a revenue-sharing basis has been launched, providing incentives for early production and coal gasification.
Furthermore, the terms for commercial coal mining have been made more liberal, allowing new companies to participate in the bidding process with reduced upfront costs and flexible operational parameters. This approach encourages investment and innovation in the coal sector, ultimately leading to increased production capacity.
Coal Companies’ Efforts to Increase Production
Coal India Limited (CIL) and Singareni Collieries Company Limited (SCCL) are actively implementing strategies to enhance coal production. CIL is adopting advanced technologies in its underground mines, such as Mass Production Technologies and Continuous Miners, to improve efficiency. The company is also exploring the development of high-capacity underground mines and utilizing state-of-the-art equipment in its opencast operations. SCCL is focusing on developing infrastructure for coal evacuation, including Coal Handling Plants and Crushers, to support new and existing projects. These efforts are crucial for maintaining a steady supply of coal to meet the growing energy demands of the country.
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