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:

  • The penalty for supplying coal below 80 per cent of the contracted amount has been reduced from 10 per cent to 0.01 per cent.  The penalty will be applicable only after three years.
  • The new FSA has extensive force majeure provisions that absolve CIL of non-supply in case of multiple contingencies – including equipment breakdown, power cuts, obstruction in transport, riots, failure to import coal due to “global shortage or delays… or no response to enquiries (by CIL) for supply of coal.”
  • CIL would have the discretion to annually review the supply level that would trigger a financial penalty.  There was no provision for such a review in the earlier FSA.

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.

The row over Bt Brinjal, a genetically modified version of the plant, provoked the government into imposing a moratorium on the commercial cultivation of the plant in India.  The debate has revolved around issues of economic efficacy, human health, consumer choice and farmers’ rights. Jairam Ramesh, the Minister of State for Environment and Forests, made public his views on the subject, a gist of which is given below:

  • The Genetic Engineering Approvals Committee (GEAC) report recommended commercial cultivation of Bt Brinjal but qualified it by stating that since the issue has important policy implications at the national level, the government should take a final view on the matter.
  • Most of the state governments have expressed concern and have sought to ban the use of Bt Brinjal, or all GM crops.
  • Pesticides have harmful effect on human health and Bt technology is one way of reducing pesticide use.  However, other routes such as non-pesticide pest management can be explored.  For example, about 6 lakh farmers in Andhra Pradesh practice non-pesticide pest management over an area of about 20 lakh acres.
  • Safety is a concern since the kind of tests that have been done is not specific or stringent enough to detect toxins.  Also, tests have only been carried out by the developers of the product, Maharashtra Hybrid Seeds Company Ltd. (Mahyco).  (The results of the biosafety tests are available on the GEAC website).
  • There is no large-scale public funded biotechnology effort toward agriculture, which could compete with Mahyco.  Monsanto is the main producer of Bt Brinjal, and Mahyco is owned to the extent of 26% by Monsanto.
  • While two government owned agricultural universities -- University of Agricultural Sciences, Dharwad and Tamil Nadu Agricultural University (TNAU), Coimbatore – have produced Bt Brinjal along with Mahyco, doubts have been raised about how Bt related research in these universities have been funded.
  • There are apprehensions that there will be diversity loss in the variety of Brinjal if Bt Brinjal is introduced, and this fear cannot be glossed over.
  • While Bt Cotton and Bt Brinjal are not comparable, the introduction of Bt Cotton in India has made India the second largest grower of cotton in the world.  Over 90% of cotton farmers in India cultivate Bt Cotton.  Many farmers support Bt Cotton on economic grounds but some did express doubts.
  • The Central Institute of Cotton Research, Nagpur has developed a Bt cotton variety (Bikaneri Nerma) whose seeds can be kept by farmers for planting during the next season.  The Director of the Institute while expressing support for Bt Brinjal has mentioned that resistance development is a serious issue.  Therefore, more tests that are well-designed, widely-accepted and independently conducted are necessary.
  • The GEAC process has been questioned by  Dr P.M. Bhargava, the Supreme Court nominee on GEAC.  He opposed the recommendation on the ground that all necessary tests had not been carried out before coming to a decision.  The 2006 committee of the GEAC had asked for several tests to be conducted which were not taken into account by the second expert committee.  All GEAC reports (including additional tests) of tests conducted with regard to Bt Brinjal are in the public domain.
  • There is some evidence that the GEAC not followed global regulatory norms of which India is a party.  For example, the Cartagena Protocol on Biosafety, Rio Declaration on Environment and Development etc.
  • Some international scientists have raised doubts about Bt Brinjal and the way the tests were conducted.
  • Many Indian scientists have supported commercialization of Bt Brinjal such as Dr G. Padmanabhan of the Indian Institute of Science; Dr Deepak Pental, Vice Chancellor of Delhi University; and Dr Raj Bhatnagar of the International Centre for Genetic Engineering and Biotechnology, New Delhi.  However, even they have mentioned the need for a statutory body with regulatory powers and R&D capabilities to govern all aspects of GM crops.
  • The Indian Council of Agricultural research and a number of farmer’s groups have come out in support of the move to introduce Bt Brinjal.

In order to understand the process followed by GEAC before giving the green signal to Bt Brinjal, we have made a timeline in which the plant was approved and the bodies involved in the process.

2000-2005 Scientific tests carried out by Mahyco on Bt Brinjal
2006 Mahyco submits bio-safety data to GEAC (regulatory body under the Ministry of Environment and Forests). Seeks permission for large scale trials.
  Supreme Court stops ongoing field trials of GM crops due to a PIL filed by civil society representatives.
2007 The expert committee 1 set up by GEAC, submits its report.  Recommends seven more studies on bio-safety be repeated for reconfirmation of data generated during confined multi-location trials but approves large scale trials.
  Supreme Court lifts ban on GM crop field trials subject to conditions such as isolation distance etc.
  As per GEAC direction, Indian Institute of Vegetable Research (IIVR) takes up the responsibility of large scale trails of Mahyco's Bt Brinjal trials at 10 research institutions across the country in 2007 and 11 in 2008.
2009 Jan: IIVR submits the results of the large scale trails. Due to concerns raised by several stakeholders, GEAC constitutes another expert committee to look into adequacy of biosafety data generated as well as the concerns raised by all stakeholders.
  Oct 8: Expert-committee 2 submits its report. States benefits of Bt Brinjal far outweigh the perceived and projected risks.
  Oct 14: GEAC approves the environmental release of Bt Brinjal containing the event EE1 (with one dissent note from P.M. Bhargava).
  Oct 15: Jairam Ramesh announces a nationwide consultation in January and February of 2010 pending a final decision on this issue.
2010 Jan 13 to Feb 6: Public meetings were organized on the Bt Brinjal issue. The summary of the consultations is available on the Ministry’s website.
  Many states announce ban on commercial cultivation of Bt Brinjal including Uttarakhand, Himachal Pradesh and Karnataka.
  Feb 9: Jairam Ramesh decides to halt the commercialization of Bt Brinjal.