New Delhi: 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).
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.
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.
