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Thermal Power & Coal Stock Management [Prelims Bits]

13 Sep 2026

Tags: Prelims   Current events of national and international importance

Source: The Hindu

  • Context: Thermal power plants face a coal-management dilemma as emergency redistribution may penalise plants that maintain adequate stocks.
  • CEA coal-stock norms: Revised plant-specific stocking norms came into force on 6 December 2021 to strengthen fuel security and inventory planning.
  • Fuel Supply Agreements (FSAs): Provide assured coal linkages, enabling thermal generators to plan fuel availability and inventories.
  • SHAKTI Policy (revised, May 2025):
    • Window I: Coal linkages for Central government generating companies and State utilities at notified prices.
    • Window II: Eligible producers, including imported-coal-based plants, procure coal through auctions at a premium.
  • Coal supply ≠ plant-level availability: Fuel security depends on the entire chain—mine production → loading → railways → transit → unloading → stockyard management.
  • Emergency redistribution: Should ideally address genuine disruptions such as mine constraints, railway bottlenecks, force majeure or sudden demand spikes, rather than chronic inventory mismanagement.
  • Recent production: Coal production exceeded 1 billion tonnes in both FY2024-25 (1,047.52 MT) and FY2025-26 (1,040.08 MT).
  • Stock position: Around 34.55 MT at thermal plants + 113 MT at pitheads/in transit ≈ 148 MT total, indicating that logistics and allocation can matter as much as aggregate availability.
  • Significance: Thermal power remains crucial for meeting peak electricity demand, making reliable coal logistics important for grid stability.
  • Prelims Link: SHAKTI = Scheme for Harnessing and Allocating Koyala Transparently in India; it was introduced to make coal allocation/linkages more transparent and market-oriented.

Prelims Question

Q1. Consider the following statements regarding the SHAKTI policy:

  1. The policy seeks to make coal allocation/linkages more transparent and market-oriented.
  2. Under Window I of the revised framework, eligible Central government generating companies and State utilities can obtain coal linkages at notified prices.
  3. Under Window II, eligible producers, including imported-coal-based plants, can procure coal through auctions involving a premium.
  4. The SHAKTI framework eliminates the need for Fuel Supply Agreements because coal linkages are allocated through auctions.

Which of the statements given above are correct?

(a) 1 and 2 only
 (b) 1, 2 and 3 only
 (c) 2, 3 and 4 only
 (d) 1, 2, 3 and 4

Answer: (b)

Explanation: 1, 2 and 3 are correct. The revised SHAKTI framework combines different mechanisms for coal linkages, including notified-price and auction-based windows. Statement 4 is incorrect: SHAKTI does not eliminate the role of Fuel Supply Agreements (FSAs), which remain important for assured coal supply and inventory planning.

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