Coal India Liberalizes Power Sale Policy for Thermal Plants
Coal India Limited (CIL) has announced a new policy allowing thermal power plants using CIL's linkage coal under long and medium-term fuel supply agreements to sell unrequisitioned surplus power in power markets and exchanges from August 1, 2025. This change applies to all existing and future long and medium-term power FSAs, benefiting Central and State Gencos, and independent power plants. The move is expected to increase market liquidity, stabilize prices, and improve power plant utilization. CIL currently has about 650.00 million tonnes of FSAs for the power sector this fiscal year.

*this image is generated using AI for illustrative purposes only.
Coal India Limited (CIL), the state-owned coal mining giant, has announced a significant policy shift that could reshape the power market landscape in India. Starting August 1, 2025, thermal power plants (TPPs) using CIL's linkage coal under long and medium-term fuel supply agreements (FSAs) will be allowed to sell unrequisitioned surplus power in power markets and exchanges.
Key Policy Changes
- Effective Date: August 1, 2025
- Scope: Applies to all existing and future long and medium-term power FSAs
- Beneficiaries: Central and State Gencos, as well as independent power plants
Impact on Power Market
This policy change marks a departure from the previous restrictions that limited these power plants to selling electricity only within their power purchase agreements (PPAs). The move is expected to have several significant implications:
Increased Market Liquidity: By allowing surplus power to be traded freely, the policy is likely to increase the overall liquidity in power exchanges.
Price Stabilization: CIL anticipates that this move will help keep spot prices in check, potentially leading to more affordable power for consumers.
Improved Utilization: Power plants can now optimize their generation capacity by selling excess power, potentially improving their operational efficiency.
Background and Context
The policy change aligns with the revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) policy, reflecting a broader trend towards liberalization in India's power sector. It follows a similar move by CIL last year, which removed restrictions on coal supplies beyond Annual Contracted Quantity (ACQ) to thermal power plants.
CIL's Perspective
A senior official from Coal India Limited stated, "We have been cementing our relations with consumers consistently, and the policy facilitates the power sector to meet consistent demand of affordable power."
Current FSA Status
For the current fiscal year, CIL has approximately 650.00 million tonnes of FSAs in place for the power sector, underscoring the significant impact this policy change could have on the market.
Conclusion
This policy shift represents a major step towards a more flexible and market-driven power sector in India. By allowing power plants to sell surplus electricity in open markets, CIL aims to promote better resource utilization and potentially more competitive pricing in the power market. The full effects of this change will likely become apparent as the market adjusts to the new dynamics post-implementation in August 2025.
Historical Stock Returns for Coal India
1 Day | 5 Days | 1 Month | 6 Months | 1 Year | 5 Years |
---|---|---|---|---|---|
+0.04% | +1.93% | -0.82% | +2.48% | -27.46% | +193.77% |