Coal India eases fuel policy, allows power sale on exchanges
THE JHARKHAND STORY DESK New Delhi, August 7: Coal India Limited (CIL), the state-owned Maharatna PSU under the Ministry of Coal,…
THE JHARKHAND STORY DESK
New Delhi, August 7: Coal India Limited (CIL), the state-owned Maharatna PSU under the Ministry of Coal, has amended its fuel supply policy to allow greater operational freedom to power producers. As per a circular dated August 6, 2025, power generators sourcing coal through linkage contracts can now sell electricity on power exchanges.
This policy change marks a significant shift in CIL’s coal supply strategy and is aimed at improving market efficiency while ensuring steady coal demand amid evolving energy sector dynamics.
From Regulated Supply to Market-Linked Trading
Until now, generators using linkage coal were barred from selling electricity on short-term trading platforms like the Indian Energy Exchange (IEX). The restriction ensured power distribution to DISCOMs at regulated tariffs under long-term Power Purchase Agreements (PPAs).
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With the new change, utilities will now have the flexibility to sell surplus electricity in the open market. This aligns with the government’s broader push towards creating a more dynamic and competitive power sector.
An official familiar with the matter stated, “The change will allow a more dynamic use of coal resources while giving power plants operational flexibility.”
Boosting Demand for Linkage Coal Amid Lower Offtake
The decision comes at a time when several thermal power plants are relying on existing stockpiles and slowing fresh coal procurement from Coal India, despite a national rise in electricity demand.
By permitting power trade using linkage coal, CIL seeks to revive interest in long-term coal supply agreements and stabilize offtake volumes. This move could also enhance the revenue stream of both CIL and power producers by enabling market-based electricity pricing.
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About Coal India Limited
Coal India Limited (CIL) is a Maharatna Central Public Sector Enterprise under the Ministry of Coal. As the world’s largest coal producer, CIL plays a pivotal role in meeting India’s energy needs through fuel supply to power and non-power sectors.
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