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The month of January 2026 witnessed several key developments in the energy, infrastructure, and natural resources sectors.
In the power sector, the Ministry of Power initiated a significant recalibration of the captive generation framework through proposed amendments to Rule 3 of the Electricity Rules, 2005, seeking to resolve long-standing interpretational ambiguities and curb misuse of group captive structures. These proposals were complemented by amendments to the Right of Way compensation guidelines for transmission lines, aimed at expediting valuation processes, and the release of the Draft National Electricity Policy, 2026, which sets out an ambitious roadmap for financial discipline, large-scale renewable integration, grid resilience, and structural reforms across generation, transmission, and distribution. Parallelly, the Central Electricity Authority issued revised guidelines on type testing of major power sector equipment, standardising testing requirements and easing compliance bottlenecks for manufacturers and utilities.
Infrastructure-related developments included the notification of the Merchant Shipping (Ships and Ports Facility Security) Rules, 2026, reinforcing maritime security governance, and revisions to dispute resolution frameworks for national highway projects.
The minerals and natural resources sector also saw important policy action. The Ministry of Coal notified the inclusion of coking coal as a critical and strategic mineral under the Mines and Minerals (Development and Regulation Act, 1957. The Ministry of Mines advanced India's critical minerals strategy through the issuance of a comprehensive policy to promote exploration and recovery of critical minerals from new projects as well as existing mine dumps and tailings. Environmental regulation underwent notable streamlining with the notification of the Environmental (Protection) Fund Rules, 2026, the Solid Waste Management Rules, 2026, and amendments to the consent framework under the Air (Prevention and Control of Pollution) Act, 1981 and Water (Prevention and Control of Pollution) Act, 1974.
On the judicial front, the Supreme Court delivered a landmark ruling in Adani Power Limited v. Union of India, conclusively holding that electricity generated within a Special Economic Zone and supplied to the Domestic Tariff Area does not attract customs duty, thereby settling a long-standing controversy at the intersection of customs law and electricity regulation. Further, in M/s Saisudhir Energy Limited v. M/s NTPC Vidyut Vyapar Nigam Limited, the Supreme Court clarified that in public utility projects, strict proof of actual loss is not a prerequisite for enforcing liquidated damages, and that once breach is established, the burden shifts to the defaulting party to demonstrate absence of loss or that the stipulated sum is penal, thereby strengthening the enforceability of liquidated damages clauses in public utility project contracts.
With these regulatory initiatives and judicial pronouncements collectively shaping the evolving legal and commercial contours of India's energy, infrastructure, and natural resources ecosystem, we hope this edition of the Energy, Infrastructure and Natural Resources Newsletter offers a coherent and engaging overview for our readers.
KEY REGULATORY UPDATES
MINISTRY OF POWER
Draft Amendments Proposed to Rule 3 of the Electricity Rules, 2003. (Link)
On January 2, 2026, the Ministry of Power ("MoP") issued draft amendments to Rule 3 of the Electricity Rules, 2005, which governs the qualification of captive generating plants (CGPs) and access to exemptions from cross-subsidy and additional surcharges ("Draft Amendment Rules"). The Draft Amendment Rules seek to resolve interpretational ambiguities and refine the framework to better support genuine group captive structures.
A key change is the shift from the existing proportionality principle for associations of persons to a collective satisfaction approach. Under the current regime, captive users must consume electricity in proportion to their ownership, subject to a permissible variation of 10%. The Draft Amendment Rules remove this requirement, allowing captive users to collectively meet the twin criteria of at least 26% ownership and 51% captive consumption, aligning associations of persons with registered co-operative societies.
The Draft Amendment Rules also introduces a cap on captive consumption based on proportionate ownership entitlement. Individual captive consumption is restricted to 100% of the user's proportionate entitlement, except where a captive user holds more than 26% ownership. Group entities, subsidiaries and holding companies are treated as a single captive user for this purpose.
Further, the Draft Amendment Rules statutorily incorporates the weighted average principle for mid-year ownership changes and replaces annual verification with a flexible "assessment period" framework.
Verification authority is shifted from the Central Electricity Authority to the National Load Despatch Centre for inter-state projects, while state-designated nodal agencies will handle intra-state projects. An appellate mechanism before a Grievance Redressal Committee is also proposed.
Amendments in the Supplementary Guidelines for payment of compensation in regard to Right of Way (RoW) for Transmission Lines (Link)
The MoP on January 15, 2026, issued amendments to the Supplementary Guidelines on compensation for Right of Way (RoW) for transmission lines, originally issued on March 21, 2025. The amendments respond to concerns over delays in submission of valuation reports by land valuers nominated by landowners.
Under the revised framework, the Market Rate Committee is required to engage land valuers empanelled with the Insolvency and Bankruptcy Board of India, preferably from the same state. The Market Rate Committee must appoint three valuers—nominated by landowners, transmission service providers, and the District Magistrate—who must submit reports within 21 days, with 2 reports selected by lottery for determining the reference market rate.
Draft National Electricity Policy, 2026 (Link)
On January 20, 2026, the MoP released the Draft National Electricity Policy, 2026 ("Draft NEP") for public consultation. Once notified, it will replace the National Electricity Policy, 2005. The Draft NEP aims to increase the share of non-fossil fuel capacity in line with India's Nationally Determined Contribution targets, promote competition in electricity supply, raise per capita electricity consumption to 2,000 kWh by 2030 and over 4,000 kWh by 2047, strengthen grid resilience for large-scale renewable integration, and improve dispute resolution to reduce financial stress on consumers.
The key highlights of the Draft NEP are as follows:
(a)Improving financial viability of the sector:
To address sectoral finances, the Draft NEP mandates issuance of tariff orders before the start of each financial year and completion of true-up orders within the same year, with regulatory proceedings capped at 120 days. State Commissions must ensure cost-reflective tariffs, avoid regulatory assets, enable automatic index-linked tariff revisions where delays occur, and progressively recover fixed costs through demand charges. Large consumers (≥1 MW) capable of self-procurement may be exempted from universal service obligations.
(b)Generation reforms:
For renewables, the Draft NEP proposes regulatory frameworks for virtual power purchase agreements and bilateral contracts, local renewable capacity with storage by distribution licensees, parity between renewable and conventional generation for grid stability by the year 2030, repowering of ageing assets, renewable microgrids, and demand supply aggregation models.
For thermal generation, reforms include advance planning of coal logistics, co-firing of cleaner fuels, 100% ash utilisation, and retrofitting plants for flexible operations and storage integration.
For nuclear power, private sector participation in modular reactors and Bharat Small Reactors is proposed, with eligibility for green bond financing and repurposing of retired thermal sites.
(c) Transmission and distribution reforms:
Transmission expansion would no longer require prior beneficiary consent, with Central Transmission Utility and State Transmission Utilities planning networks based on identified needs. The Draft NEP promotes competitive bidding, transparent risk-sharing, uniform RoW charges, and advanced technologies.
In distribution, monopoly structures would be gradually phased out through public-private partnerships and multiple licensees, alongside cost-reflective tariffs, smart meter rollouts, national reliability benchmarks, and time-of-use tariffs.
CENTRAL ELECTRICITY AUTHORITY
Issuance of revised Guidelines for the Type Test for Major Equipment of Power Sector".(Link)
On January 19, 2026, the Central Electricity Authority ("CEA") issued the Revised Guidelines for Type Testing for Major Equipment of the Power Sector ("Revised Guidelines"), replacing the 2022 guidelines. The revisions address stakeholder concerns regarding the lack of uniformity in the periodicity of type testing for similar classes of equipment and aim to standardise testing requirements, reduce repetitive testing, and ease congestion at testing facilities. The Revised Guidelines provide that type testing on equipment, for which testing facility is available in India, shall be conducted in India, in an approved and accredited independent laboratory. For indigenous equipment, for which a testing facility is not available in India, testing shall be undertaken in a laboratory of a foreign country which is accredited by the national accreditation body of the concerned country. In-house testing by manufacturers is permitted if the laboratory is accredited and tests are conducted in the presence of the National Accreditation Board for Testing and Calibration Laboratories, a purchasing utility, or the CEA. Test reports must be issued within 15 days of completion of testing. Re-testing is required only in cases of changes in design, material, manufacturing process, or relevant standards.
The Revised Guidelines also provide for validity of 220 kV type test reports for 230 kV equipment where system voltage and insulation levels are identical, mandate calibration of testing equipment, and permit reliance on parent or overseas subsidiary test reports for gas insulated switch gears and hybrid switchgear.
MINISTRY OF COAL
Draft Amendments to Minerals Concession Rules, 1960. (Link)
The Ministry of Coal ("MoC") on January 22, 2026, invited public comments on draft amendments to the Minerals Concession Rules, 1960 ("Draft Rules"), pursuant to the insertion of Section 15B under the Mines and Minerals (Development and Regulation) Amendment Act, 2025. The proposed amendments seek to formalise the treatment of minerals discovered during mining operations but not originally specified in the lease.
Under the Draft Rules, a mining lessee would be required to report the discovery of any unlisted mineral to the concerned State Government within 6 months of notification of the amendments or within 60 days of such discovery, whichever is later.
The Draft Rules further allow a mining lease holder to apply for inclusion of additional minerals in an existing lease. The State Government would be required to permit such inclusion within 60 days, subject to specified conditions.
For minerals listed under Part A of the First Schedule to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), these conditions include completion of prospecting operations across the mineralised area, preparation and approval of a geological report, and approval of a mining plan for the additional minerals.
Inclusion of Coking Coal as a Critical & Strategic Mineral under the MMDR Act. (Link)
On January 27, 2026, the MoC, in exercise of its powers under Section 11C of the Mines and Minerals (Development and Regulation) Act, issued a gazette notification including coking coal within the definition of "coal" under Part A (hydrocarbons/energy minerals) and, consequently, under Part D (critical and strategic minerals) of the First Schedule to the MMDR Act.
MINISTRY OF ENVIRONMENT, FOREST & CLIMATE CHANGE
Environmental (Protection) Fund Rules, 2026 (Link)
The Ministry of Environment, Forest and Climate Change ("MoEF&CC"), on January 15, 2026, issued the Environmental (Protection) Fund Rules, 2026 ("Protection Fund Rules"). The Protection Fund Rules envisage the creation of a fund in the Public Account of India ("Environmental Protection Fund"), which shall be utilised for the purposes of installation, operation, maintenance of environmental monitoring equipment, development and upgradation of environmental laboratories, research relating to clean technologies among other such listed purposes. Amounts raised through penalties imposed under the Air (Prevention and Control of Pollution) Act, 1981, Water (Prevention and Control of Pollution) Act, 1974, Environment (Protection) Act, 1986, and any other income raised as per section 16(2) of the Environment (Protection) Act, 1986 shall be credited to the Environmental Protection Fund.
Solid Waste Management Rules, 2026 (Link)
On January 27, 2026, the MoEF&CC issued the Solid Waste Management Rules, 2026 ("Solid Waste Management Rules") which shall come into force with effect from April 1, 2026, and shall be applicable to all entities generating solid waste. The Solid Waste Management Rules require every waste generator to segregate and store waste at source into four streams—wet waste, dry waste, sanitary waste, and special care waste—and to hand over such segregated waste to authorised waste pickers or waste collectors in accordance with directions or notifications issued by local authorities from time to time, along with other prescribed obligations.
Control of Water Pollution (Grant, Refusal or Cancellation of Consent) Amendment Guidelines, 2026 (Link)
On January 23, 2026, the MoEF&CC notified amendments to the Uniform Consent Guidelines under the Air (Prevention and Control of Pollution) Act, 1981 and the Water (Prevention and Control of Pollution) Act, 1974, which came into force on January 27, 2026. The amendments streamline environmental approvals by removing periodic renewals, providing indefinite validity for Consent to Operate (subject to cancellation), and permitting one-time consent fees for periods of 5–25 years. A unified national online portal will be developed for all consent and authorisation processes. The framework introduces Registered Environment Auditors to conduct inspections and verifications, provides deemed Consent to Establish for micro and small units in notified industrial areas, and enables single-window processing for consents and waste management authorisations, significantly reducing regulatory complexity and timelines.
MINISTRY OF NEW & RENEWABLE ENERGY
Time-Extension in Scheduled Commissioning Date of RE Projects on account of Hon'ble Supreme Court Judgement on Great Indian Bustard. (Link)
On January 12, 2026, the Ministry of New and Renewable Energy issued an order granting extensions for Scheduled Commissioning Date ("SCD") and Scheduled Commencement of Supply ("SCSD") of renewable energy projects. The extensions address delays in approvals under Section 68 of the Electricity Act, 2003, for overhead transmission lines in Rajasthan and Gujarat due to the pending Supreme Court judgment on the critically endangered Great Indian Bustard. Projects with SCD/SCSD after March 21, 2024, are eligible. The order treats such delays as force majeure and requires developers to extend the benefit of the relief downstream to contractors, equipment suppliers, and other stakeholders.
MINISTRY OF PORT, SHIPPING AND WATERWAYS
Merchant Shipping (Ships and Ports Facility Security) Rules, 2026 (Link)
On January 22, 2026, the Ministry of Ports, Shipping and Waterways notified the Merchant Shipping (Ships and Ports Facility Security) Rules, 2026 ("Security Rules"), applicable to Indian-registered vessels on international voyages, foreign vessels on international voyages within Indian waters, port facilities, and companies. The Security Rules require all covered entities to adhere to the specified security requirements and protocols. The Bureau of Port Security, established under the Merchant Shipping Act, 2025, has been designated as the authority responsible for overseeing, implementing, and enforcing compliance with the provisions of the Security Rules.
MINISTRY OF MINES
The Minerals (Other than Atomic and Hydro Carbons Energy Minerals), Concession (Amendment) Rules, 2026 (Link)
The Ministry of Mines ("MoM"), on January 12, 2026, notified the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession (Amendment) Rules, 2026 to amend the Minerals (Other than Atomic and Hydro Carbons Energy Minerals) Concession Rules, 2016. The amendment inserts sub-rule 12 in Rule 45, stipulating that the average sale price of caesium in Indian rupees will be published by the Indian Bureau of Mines. The price will be calculated based on the latest calendar year prices published by the United States Geological Survey or other reputable sources, multiplied by (a) the Reserve Bank of India's average reference rate for that year and (b) a conversion factor of 1.23.
Policy for Exploration of Critical Minerals in New Project and Recovery of Critical Minerals from Overburden, Dumps and Tailings of Existing Mines, 2025(Link)
On January 16, 2026, the MoM issued the Policy for Exploration of Critical Minerals in New Projects and Recovery from Overburden, Dumps, and Tailings of Existing Mines, 2025 ("Policy"). The Policy aims to promote the discovery and recovery of critical minerals across all value chains, including exploration, detection of companion minerals in operating mines and dumps, and facilitation of their mining. It also sets out standard operating procedures for: (a) exploration of non-coal and associated rocks, (b) sampling and analysis of coal and minor minerals, (c) evaluation of atomic mineral deposits, and (d) assessment of mine dumps, tailings, and coal washery rejects for critical and strategic minerals.
NATIONAL HIGHWAYS AUTHORITY OF INDIA
Modifications to the Dispute Resolution Framework for Model Concession Agreements, especially for BoT (Toll), HAM, and EPC Models (Link)
The Ministry of Road Transport and Highways has updated the dispute resolution framework for Build-Operate-Transfer (Toll), Hybrid-Annuity (HAM), and (Engineering, Procurement, and Construction) EPC projects by incorporating the Ministry of Finance's Guidelines on Arbitration and Mediation for domestic public procurement. The revised provisions, effective immediately (except for ongoing arbitration), require disputes to first undergo amicable settlement. Claims below INR 10 crore are to be arbitrated through the Society for Affordable Redressal of Disputes or India International Arbitration Centre, while claims of INR 10 crore or above must be resolved via conciliation or mediation, with arbitration excluded. Declaratory or non-monetary disputes are outside arbitration and may be pursued in civil courts.
KEY JUDICIAL PRONOUNCEMENTS
SUPREME COURT OF INDIA |
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| Case Title | Summary |
| Adani Power Limited & Another. V. Union of India & Others | Judgement dated January 5, 2026 | 2026 SCC OnLine SC 11 |
Adani Power Limited ("Appellant") operated a power plant within the Mundra Special Economic Zone ("SEZ"). Electricity generated from the plant was partly consumed within the SEZ and largely supplied to buyers in the Domestic Tariff Area ("DTA"). The dispute concerned the levy of customs duty on electricity supplied from the SEZ to the DTA. The Appellant challenged the judgment dated June 28, 2019, of the Gujarat High Court, which had held that customs duty was leviable on electrical energy generated in an SEZ and supplied to the DTA. The Supreme Court examined the charging scheme under Section 12 of the Customs Act, 1962 ("Customs Act") and Section 30 of the SEZ Act, 2006 ("SEZ Act"). Section 12 of the Customs Act levies customs duty on goods "imported into India", while Section 30 of the SEZ Act provides that goods cleared from an SEZ to the DTA shall be chargeable to customs duty as if such goods were imported. The Supreme Court held that electricity generated domestically within an SEZ does not constitute "import into India" and therefore does not satisfy the taxable event under Section 12 of the Customs Act. Consequently, no customs duty could be levied on such supply. The Supreme Court further clarified that the deeming fiction under Section 30 of the SEZ Act is intended only to align the duty treatment of goods cleared to the DTA and does not expand or create a new charging event beyond Section 12 of the Customs Act. Accordingly, the Supreme Court allowed the appeal, declared the levy of customs duty on electrical energy unlawful, and directed refund of the amounts deposited by the Appellant under protest. |
| M/s Saisudhir Energy Limited v. M/s NTPC Vidyut Vyapar Nigam Limited | Judgment dated January 30, 2026 | 2026 INSC 103 |
NTPC Vidyut Vyapar Nigam Limited ("NVVNL") was the nodal agency designated under the Government of India's Jawaharlal Nehru National Solar Mission to procure solar power. M/s Saisudhir Energy Limited ("SEL") was a solar power developer that entered into a Power Purchase Agreement ("PPA") with NVVNL for setting up and supplying 20 MW of solar power. Disputes arose when SEL delayed commissioning the project. The PPA contained a clause providing for liquidated damages in the event of delay. The arbitral tribunal rendered a split award on the question of damages. The matter eventually reached the Supreme Court after proceedings under Sections 34 and 37 of the Arbitration and Conciliation Act, 1996. The core issue before the Supreme Court was the interpretation and application of Section 74 of the Indian Contract Act, 1872 ("Contracts Act"), which permits the award of reasonable compensation not exceeding the amount stipulated in the contract, whether or not actual loss is proved. The Supreme Court reiterated that in cases involving public utility projects, strict proof of actual loss may not always be possible. Relying on its earlier decision in M/s Construction and Design Services vs. D.D.A., 2015 INSC 92, the Supreme Court held that delay in commissioning a public utility project can itself result in loss, including broader societal and environmental impact. Where a contract serves a public purpose—such as promoting renewable energy under a national mission—the timelines agreed by the parties assume heightened significance. Importantly, the Supreme Court clarified that in such cases, once breach is established, the burden shifts to the party in default to demonstrate that no loss was caused or that the stipulated sum is penal in nature. In the absence of such proof, the stipulated liquidated damages clause can be enforced, subject to the test of reasonableness under Section 74 of the Contracts Act. |
DELHI HIGH COURT |
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| Case Title | Summary |
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Roadway Solutions India Infra Limited ("Respondent") was awarded the works contract for execution of Package VIII of the Delhi–Mumbai National Expressway. Due to delays in execution, the works remained incomplete. In December 2025, the National Highways Authority of India ("Petitioner") issued a notice of intention to terminate the contract. The Respondent approached the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, 1996 and obtained an interim injunction from a Single Judge restraining the Petitioner from acting upon the termination notice. The Petitioner challenged this order in appeal. Before the Division Bench of the Delhi High Court, the Petitioner relied upon Section 41(ha) of the Specific Relief Act, 1963 ("Specific Relief Act"), which provides that an injunction cannot be granted where it would impede or delay the progress or completion of an infrastructure project. The Petitioner also relied on Section 20A of the Specific Relief Act, which prohibits courts from granting injunctions in suits involving contracts relating to infrastructure projects specified in the Schedule where such relief would cause impediment or delay in project execution. It was further argued that the construction of roads and highways stands expressly classified as infrastructure under the Schedule to the Specific Relief Act. The Division Bench of the Delhi Court accepted these submissions and held that Sections 20A and 41(ha) of the Specific Relief Act embody a clear legislative intent to restrict judicial interference in infrastructure contracts through injunctive relief. It reiterated that infrastructure and other commercial contracts ought not to be continued by way of interim orders and that any illegality in termination can be compensated through damages. |
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