The Cabinet on Wednesday gave its nod to two decisions key to the energy sector: the new Coal Linkage Policy, and the setting up of 10 new nuclear power reactors.

Briefing mediapersons, Minister of State for Coal, Power, Renewable energy, and Mines Piyush Goyal said the Cabinet Committee on Economic Affairs had approved the policy to auction Coal India’s Fuel Supply Agreements to thermal power producers.

This was enabled through the introduction of a New Coal Allocation Policy for Power Sector. The policy has been named SHAKTI, or Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India, Goyal said; thermal power plants under construction will get coal from this policy. These plants are expected to be commissioned by 2021-2022, Goyal said.

Thermal power projects that could not be commissioned by March 2015 will now be eligible to draw coal if the plants are commissioned before March 2022, he added.

Fuel supply agreements will be signed with the existing Letter of Assurance holders for 28,000 MW of power projects.

According to Mayuresh Joshi, Fund Manager, Angel Broking, the Modified Coal Linkage Policy will only cover the regulated units. The linkages will be first awarded to State-owned discomes, which in turn will assign them to State/Central power producers on allocation-basis. For independent power producers with Power Purchase Agreements, the allocation will be via the reverse auction route.

If the Coal Linkage Policy can ensure the flow of dry fuel to power plants at competitive rates, it can be a game-changer for power companies, Joshi said.

On the other decision, Goyal said, “Ten indigenously developed Pressurised Heavy Water Reactors of 700 MW each will be set up” on a ₹70,000 crore investment. “We expect 33,400 direct or indirect jobs will be created through the exercise,” he added.

“Once set up, this will bring the country’s total nuclear power capacity to close to 20,000 MW,” Goyal told BusinessLine.