Revised Ash Utilisation Guidelines for Thermal Power Plants Issued by the Ministry of Power

Introduction

On 30 January 2026, the Ministry of Power issued revised guidelines governing the disposal and utilisation of ash generated by coal- and lignite-based thermal power plants. The guidelines have been issued in continuation of the Ash Utilisation Notification dated 31 December 2021 issued by the Ministry of Environment, Forest and Climate Change (MoEFCC), as subsequently amended.

The revised framework establishes procedures for the declaration of issuable ash, allocation of ash to user agencies, concessional supply to Micro and Small Enterprises (MSEs), auction-based disposal mechanisms, and limits on the transportation cost liability of thermal power plants. The guidelines supersede the Ministry of Power’s earlier guidelines dated 15 March 2024 and apply prospectively to the disposal of ash by coal and lignite thermal power plants.

Declaration of Issuable Ash

Under the revised framework, thermal power plants are required to declare annually the quantity of issuable ash available for utilisation. Issuable ash refers to the quantity of ash including fly ash, bottom ash, and pond ash, that remains available for supply after accounting for existing contractual commitments and operational requirements.

The declared issuable ash quantity forms the basis for all subsequent allocation and disposal measures under the guidelines. Thermal power plants must ensure that such ash is supplied to user agencies for purposes permitted under the applicable MoEFCC ash utilisation notification.

Allocation Framework for Ash Utilisation

The guidelines establish a structured framework for allocation of issuable ash to eligible user agencies. Thermal power plants are required to facilitate utilisation of ash for applications specified under the environmental notification, including its use in construction materials, cement manufacturing, infrastructure works, and other permitted uses.

The allocation mechanism is designed to ensure transparency in the supply of ash and to promote greater utilisation of ash generated by thermal power plants, thereby reducing dependence on ash pond disposal.

Reserved Supply for Micro and Small Enterprises

A portion of the issuable fly ash is required to be reserved for supply to Micro and Small Enterprises and local users on concessional terms. The quantum of ash reserved under this category and the concessional rate applicable for such supply are to be determined by a plant-level committee.

The committee is chaired by the Head of Plant and includes representatives of the local administration and user associations. Allocation under this category is undertaken through an Expression of Interest process.

Applicants seeking supply under this category are required to possess a valid Consent to Operate issued by the competent environmental authority or valid registration as a Micro or Small Enterprise. Local users must also furnish a self-declaration confirming that the ash will be utilised for purposes permitted under the applicable environmental notification.

Auction-Based Disposal of Remaining Ash

After meeting the reserved supply requirements, the balance issuable ash is required to be disposed of through a transparent market-based mechanism. The preferred mode of disposal is an open auction process.

The guidelines prescribe a minimum floor price of ₹1 per metric tonne for auction-based disposal. Where quantities of ash remain unutilised following the auction process and other prescribed steps, thermal power plants may supply such ash on a first-come, first-served basis on an “as-is-where-is” basis, with the lifting agency bearing the cost of transportation.

Disposal of Unutilised Ash and Transport Cost Allocation

Where ash remains unutilised after completion of the allocation and auction processes, thermal power plants are required to notify identified user agencies located within a radius of up to 300 kilometres regarding the availability of ash free of cost, subject to the user agency arranging transportation.

The guidelines also prescribe a limitation on the transportation cost liability of thermal power plants for long-distance utilisation of ash. For utilisation avenues requiring transportation beyond a distance of 300 kilometres:

• the plant’s liability towards transportation cost is restricted to a notional cost equivalent to road transport for a distance of 300 kilometres;
• this limitation applies irrespective of the actual mode of transport used; and
• the provision standardises cost allocation for long-distance ash utilisation.

These provisions are intended to promote utilisation of ash while limiting the financial exposure of thermal power plants in relation to transportation costs.

Empanelment of Transport Agencies

Thermal power plants are required to empanel transport agencies through a competitive bidding process to facilitate the movement of ash to user agencies. The bidding process may rely on State Schedule of Rates where available, or the Central Schedule of Rates in the absence of state-specific benchmarks.

The guidelines also require plants to ensure continuity between an expiring panel of transport agencies and a newly constituted panel in order to avoid disruptions in ash transportation arrangements. Transport agencies engaged for ash movement must comply with applicable environmental requirements governing the safe handling and transport of ash.

Management of Untied Ash

Where quantities of ash that have been reserved or allocated remain untied, such quantities must be re-offered through the allocation and disposal mechanisms prescribed under the guidelines. Only after the prescribed procedures have been exhausted may thermal power plants undertake residual disposal in accordance with considerations of financial prudence and operational requirements.

This structured sequence of allocation and disposal measures is intended to ensure systematic utilisation of ash and to minimise reliance on discretionary disposal practices.

Applicability and Monitoring

The revised guidelines apply to coal- and lignite-based thermal power plants in the central, state, and private sectors. They supersede the Ministry of Power’s earlier guidelines dated 15 March 2024.

Existing contractual arrangements for ash supply may continue until their expiry; however, all new allocations and disposal of remaining issuable ash must conform to the procedures prescribed under the revised guidelines.

Implementation of the framework is subject to monitoring by the Central Electricity Authority.

Conclusion

The revised guidelines issued by the Ministry of Power establish a structured framework governing the declaration, allocation, and disposal of ash generated by coal and lignite thermal power plants. By introducing procedures for concessional supply to Micro and Small Enterprises, auction-based disposal of remaining ash, empanelment of transport agencies, and a capped liability for long-distance transportation, the guidelines aim to strengthen the implementation of India’s ash utilisation regime.

The framework is intended to support higher levels of ash utilisation while providing operational clarity to thermal power plants and ensuring alignment with the environmental requirements prescribed under the MoEFCC ash utilisation notification.