Journalism of Courage
In a bid to decisively settle the bitter wrangling between power companies and Coal India Limited (CIL) over the terms of fuel supply to upcoming projects,the coal ministry is likely to propose a trigger level of 65 per cent for the current fiscal in the proposed Fuel Supply Agreements (FSAs) and ramping it up to 80 per cent by the end of the Twelfth Plan period.
At a meeting to be convened by Prime Minister Manmohan Singhs Principal Secretary Pulok Chatterji on Friday,the coal major may also recommend enhancing the penalty level close to 7 per cent to allay concerns raised by power firms,sharply up from the 0.01 per cent proposed earlier,along with a dilution in the force majeure clauses in the FSAs.
The top brass of the coal ministry is expected to spell out a clear roadmap for ironing out differences between the CIL and its buyers,mostly power companies,on certain contentious provisions in the FSA,which they allege are heavily tilted in favour of the coal company. The CIL Board had,in April,approved the revised FSA mechanism,which mandates the company to supply at least 80 per cent of the requirement of each company.
The PSU was to ink FSAs with 48 power companies to enable them to operate an estimated 18,522 MW of capacity,implying that CIL will have to annually supply an additional 54 million tonne over and above its current tied-up capacity. The companys Board had also proposed a penalty clause of 0.01 per cent with a three-year moratorium on its execution,which resulted in protests from power firms,who then petitioned the PMO to intervene.
After an in-house diligence,we have reasoned that 65 per cent supply level in the first three years of the 12 th Plan is not unfair. In the fourth year it should be upped to 74 per cent and in the terminal year (2016-17) it should be ramped up to 80 per cent, a top coal ministry official told The Indian Express.
The ministry now agrees with the contention of the power producers that quantum of penalty is inadequate and needs to be increased to an acceptable level.
It will be fair if we peg the penalty level at close to 7 per cent to help douse the clamour for revision of penalty provisions, the official said.
Arguing that the provisions in the FSAs pertaining to the force majeure clauses,the coal ministry may suggest doing away with certain provisions like breakdown of equipment,failure of contractors to deploy machinery or spare parts,shortage of explosives and even power cuts.
