Coal India Eases Supply Rules, Lets Utilities Trade Power on Exchanges
Coal India has revised its coal supply policy, now permitting power generators to sell electricity on power exchanges using linkage coal, aiming to boost demand and market efficiency.
New Delhi, August 7, 2025. In a move that signals greater flexibility for India’s power sector, Coal India Limited (CIL) has updated its long-standing fuel supply policy. It now allows power generators to sell electricity on power exchanges even when the coal is sourced through linkage agreements.
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According to a circular dated August 6, 2025, the state-owned coal company stated that the change aims to ensure steady demand for coal. It also enables utilities to better manage their electricity output and revenues through open-market trading.
Shift from Traditional Norms
Previously, power companies receiving coal under these long-term linkage contracts could not trade the power generated from it on short-term markets like the Indian Energy Exchange (IEX). This restriction existed to ensure electricity was supplied at set prices to distribution companies.
The latest development shows a more market-focused approach as India continues to modernize its electricity sector and increase activity in power trading platforms.
“The change will allow a more dynamic use of coal resources while giving power plants operational flexibility,” said an official familiar with the decision.
Context Behind the Policy Change
The relaxation comes as thermal power plants consume less coal, relying more on existing stockpiles and reducing new purchases from Coal India, despite rising electricity demand across the country.
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By allowing sales on power exchanges, Coal India aims to stabilize coal demand and encourage offtake under linkage deals, which are a key revenue source for the PSU.
About Coal India Limited
Coal India is the world’s largest coal mining company and plays a central role in India’s energy supply chain. It operates under the Ministry of Coal, Government of India, and fulfills over 80% of the country's coal needs.