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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.
Over the next few weeks, Assembly elections are scheduled to be held in five States – Uttar Pradesh, Punjab, Uttarakhand, Manipur and Goa. As parties prepare for the upcoming elections, we take a look at the electoral trends in these states over the past 25 years. We see that electoral fortunes in some states have fluctuated widely. The electoral mandate in UP has varied over the last 25 years. Five different parties -- Congress, Janata Dal, BJP, SP and BSP have been the single largest party in the Assembly at some point in time. In Punjab, the Akalis and the Congress have alternately controlled the government. In Uttarakhand, the 2007 elections saw the BJP take over control from the Congress. In Manipur and Goa, Congress has been dominant player in elections. In both states, it emerged as the single largest party in all but one election since 1984. In Manipur, the Congress lost this status to the Manipur State Congress Party (MSCP), a splinter group of the Congress in 2000. In Goa, it lost this status to BJP in 2002. The results of Uttar Pradesh elections will have the highest impact on national politics. The state has 80 out of 543 elected seats in Lok Sabha and 31 out of 231 elected seats in Rajya Sabha. The results could give an indication of the prospects for these parties in the next general elections, and may also change the composition of Rajya Sabha over the next few years. Given that there are five parties (BSP, SP, BJP, Congress and RLD) with a significant base in the state, the possibilities of post poll arrangements are also wide open. For more details, see our Vital Stats.