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There has been no resolution so far to the issue of assured fuel supply from Coal India Limited (CIL) to power producers. According to reports, while CIL released a model supply agreement in April 2012, so far only around 13 Fuel Supply Agreements (FSAs) have been signed. Originally around 50 power units were expected to sign FSAs with CIL. Power producers have objected to the model FSA released by CIL, particularly its force majeure provisions and the dilution of financial penalties in case of lower than contracted supply. Background The adverse power supply situation has attracted greater attention in the past few months. According to Central Electricity Authority's data, the gap between peak demand and peak supply of power in March 2012 was 11 per cent. The decreasing availability of fuel has emerged as a critical component of the worsening power supply situation. As of March 31, 2012, there were 32 critical thermal power stations that had a coal stock of less than 7 days. The gap between demand and supply of coal in the past three years is highlighted below: Table 1: Coal demand/Supply gap (In millions of tonnes)
2009-10 |
2010-11 |
2011-12 |
|
Demand |
604 |
656 |
696 |
Supply |
514 |
523 |
535 |
Gap |
90 |
133 |
161 |
Source: PIB News Release dated May 7, 2012 Coal accounts for around 56 per cent of total installed power generation capacity in India. Increased capacity in thermal power has also accounted for almost 81 per cent of the additional 62,374 MW added during the 11th Plan period. Given the importance of coal in meeting national energy needs, the inability of CIL to meet its supply targets has become a major issue. While the production target for CIL was 486 MT for 2011-12, its actual coal production was 436 MT. Fuel Supply Agreements In March 2012, the government asked CIL to sign FSAs with power plants that have been or would be commissioned by March 31, 2015. These power plants should also have entered into long term Power Purchase Agreements with distribution companies. After CIL did not sign FSAs by the deadline of March 31, 2012 the government issued a Presidential Directive to CIL on April 4, 2012 directing it to sign the FSAs. The CIL board approved a model FSA in April 2012, which has not found acceptance by power producers. According to newspaper reports, many power producers have expressed their dissatisfaction with the model FSA released by CIL. They have argued that it differs from the 2009 version of FSAs in some major ways. These include:
Most power producers, including NTPC, the country’s biggest power producer, have refused to sign the new FSA. Reports suggest that the Power Minister has asked the Prime Minister’s Office to mandate CIL to sign FSAs within a month based on the 2009 format. CIL has received a request from NTPC to consider signing FSAs based on the same parameters as their existing plants, but with the revised trigger point of 80 per cent (down from 90 per cent earlier). Underlying this situation is CIL’s own stagnating production. Various experts have pointed to the prohibition on private sector participation in coal mining (apart from captive projects) and the backlog in granting environment and forest clearances as having exacerbated the coal supply situation.
On November 28, 2012, the Comptroller and Auditor General submitted its report on the implementation of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). According to the report most of the projects initiated under JNNURM have not been completed. For instance with respect to urban infrastructure projects, only 231 projects out of the 1298 sanctioned projects have been completed. Similarly, with respect to housing projects, only 22 of the 1517 projects have been completed. Some of the other key recommendations of the report are:
The need and objectives of JNNURM According to the 2011 census India’s urban population has increased from 286 million in 2001 to 377 million in 2011 . With the increase in urban population, there is a requirement to improve the urban infrastructure and improve the service delivery mechanisms. With these specific objectives in mind, the central government launched the Jawaharlal Nehru National Urban Renewal Mission 2005-2006. The aim of the Mission is to encourage reforms and fast track planned development of identified cities (such as cities with a population of more than 1 million as per the 2001 census). JNNURM has two main components namely : (i) Urban Infrastructure and Governance and (ii) Urban Infrastructure Development for Small and Medium Towns. The duration of JNNURM was from 2005-06 to 2011-12. However, as the projects have not been completed the Government has extended its duration until March 2014. Funds for JNNURM The funds for JNNURM are provided through the Additional Central Assistance. This implies that the funds are provided as grants to the states directly from the centre. In the 2012 Union Budget, the central government has allocated Rs 12,522 crore for JNNURM. This represents around 10 % of the total central assistance through the different schemes to states and union territories in 2012-13. As on June 30 2012, 554 projects at a total cost of Rs 62,253 crore have been sanctioned under the Urban Infrastructure and Governance sub-mission of JNNURM. The table below shows the status of the sanctioned JNNURM projects in the different states. State wise status of the projects under JNNURM (as on August 6, 2012)
Name of State | Total Allocation (Rs Lakh) | Number of sanctioned projects | Completed Projects |
Andhra Pradesh | 2,11,845 | 52 | 18 |
Arunachal Pradesh | 10,740 | 3 | NA |
Assam | 27,320 | 2 | NA |
Bihar | 59,241 | 8 | NA |
Chandigarh | 27,087 | 3 | NA |
Chattisgarh | 24,803 | 1 | NA |
Delhi | 2,82,318 | 23 | 4 |
Goa | 12,094 | 2 | NA |
Gujarat | 2,57,881 | 72 | 40 |
Haryana | 32,332 | 4 | NA |
Himachal Pradesh | 13,066 | 5 | NA |
Jammu & Kashmir | 48,836 | 5 | NA |
Jharkhand | 94,120 | 5 | NA |
Karnataka | 1,52,459 | 47 | 22 |
Kerala | 67,476 | 11 | NA |
Madhya Pradesh | 1,32,850 | 23 | 7 |
Maharashtra | 5,50,555 | 80 | 21 |
Manipur | 15,287 | 3 | NA |
Meghalaya | 15,668 | 2 | NA |
Mizoram | 14,822 | 4 | NA |
Nagaland | 11,628 | 3 | NA |
Orissa | 32,235 | 5 | NA |
Punjab | 70,775 | 6 | 1 |
Puducherry | 20,680 | 2 | NA |
Rajasthan | 74,869 | 13 | 2 |
Sikkim | 10,613 | 2 | NA |
Tamil Nadu | 2,25,066 | 48 | 12 |
Tripura | 14,018 | 2 | NA |
Uttar Pradesh | 2,76,941 | 33 | 4 |
Uttarakhand | 40,534 | 14 | NA |
West Bengal | 3,21,840 | 69 | 15 |
Source: Jawaharlal Nehru National Urban Renewal Mission; PRS.