Coal India set to finalise Shakti contracts soon

KOLKATA: Coal India will initiate long-term coal supply contracts on Monday to supply 40 million tonnes under the Shakti scheme. The state-run miner intends to complete the process on Wednesday.

Shakti or the Scheme to Harness and Allocate Koyla (Coal) Transparently in India, will give long-term contracts to power companies. It is expected to revive 13,000 MW of power plants in the country that are yet to secure steady fuel supply. Shakti was passed by the cabinet in June this year and would be held for the first time this week.

According to a senior Coal India executive, mock auctions under Shakti were completed last Thursday and Friday. On Monday, MSTC will conduct the first part of the auction where consumers would be given the source of coal and they would make their initial price offer. The price offer would be discounts on their existing power generation tariffs based on the source and the quality of coal on offer.


On the following day, they will be given a chance to revise their offer based on offers made by other bidders. On day-3, (September 13), they will be announcing their levelised discounts on the basis of offers made on day-1 and day-2.

The ones that offer highest discounts on each source of coal will be eligible to sign long-term supply contracts. Last Friday, potential bidders deposited earnest money for participating in the auctions.

In July, Coal India asked five of its seven coal producing subsidiaries to make sure a total of 40 million tonnes of coal is kept aside for auction to independent power producers under Shakti.

More than 50% of this quantity at 12 million tonnes each will be supplied from South Eastern Coalfields and Central Coalfields. While the rest will be supplied by Northern Coalfields at 4 million tonnes, Mahanadi Coalfields at 9 million tonnes and Western Coalfields at 3 million tonnes.