State-owned coal mining company Coal India Ltd (CIL) will offer 50 Mt of coal through auctions under the government's Shakti scheme. Independent power producers (IPPs) will have to submit their applications for long-term coal supply agreements within 15 days and the auction will be conducted by state-run MSTC within the first week of August.
The Shakti scheme was adopted in May 2017. It aims to ensure an adequate supply of coal to power plants through reverse auctions. The auction tariffs will be based on those charged by independent power producers from the distribution companies and the lowest bids will be eligible for receiving coal from CIL over 20 to 25 years. The mechanism will help Coal India sell 50 Mt of additional coal each year over the next 25 years; it will also help power producers secure coal supply and cut cost, reducing final costs for distribution companies and end-customers.
Based on an average consumption of 4.5 Mt of coal for 1 GW of thermal power capacity, the 50 Mt auction should fuel more than 11 GW of power capacity.