Friday, Oct 07, 2022

Why Power Sector Employees, Farmers Are Against Electricity Amendment Bill

The government claims that the privatisation of the power sector will provide options to the customers to choose their power distributors

Source: Shutterstock
Source: Shutterstock

Soon after the contentious Electricity (Amendment) Bill, 2022 was tabled in the Lok Sabha on Monday, it was sent to the Parliament Standing Committee for discussion after protests by the opposition. The bill, which proposes certain amendments to the Electricity Act, 2003, bats for the privatization of electricity on the lines of communication.

The bill has not gone down well with some stakeholders. Several power sector employees and power engineers held demonstrations across the country with the All India Power Engineers Federation (AIPEF) saying that the bill will privatize the power sector and end subsidies to power consumers. 

Protests were witnessed in Punjab where farmers and political parties said that the farming community will be the most affected if the bill is passed in the parliament amid fears of power subsidies being scrapped. CM Bhagwant Mann had also claimed that it was an attack on federalism as electricity is a concurrent subject. 

Defending the bill against the opposition leaders’ allegations, R.K. Singh, union minister for power and new & renewable energy, tweeted, “The Bill is not contentious at all. There are no provisions in the Bill that will affect the subsidies being granted to any category. There is no provision in the Bill which affect farmers.”

“We consulted all the states - in writing and also in meetings with them. In order to further the consultation process, before I introduce the Bill I had written to the Hon'ble Speaker giving notice of my intention to move that the Bill to the Standing Committee for examination during the process. So it was our instance that the Bill was sent to the Standing Committee,” Singh added. 

Behind The Amendments

The Electricity Amendment Bill lists down the continuing as well as new challenges of sustainability of the power sector, contract enforcement, payment security mechanism, energy transition and the need to provide choice (of multiple service providers) to consumers in order to promote competition as some of the reasons why it had become necessary to make certain amendments in the Electricity Act.

“The amendments to the Act are also necessary in view of the importance of green energy for our environment in the context of global climate change concerns and our international commitments to increase the share of renewable energy. Further, it has become necessary to strengthen the regulatory mechanism, the adjudicatory mechanism in the Act and to bring administrative reforms through improved corporate governance of distribution licensees,” it adds.

The following are some of the amendments that the bill is proposing: 

Introduction Of Private Players: The amendment talks about the participation of private players along with state-authorized/owned power distribution companies for electricity distribution, given they get the license. It also says that distribution licensees can use the distribution systems of other licensees in the area of supply through a system of non-discriminatory open access on payment of wheeling charges.

Multiple Discoms In One Area: The bill proposes the presence of more than one power distribution company (discom) in one area. Through this, the government is planning to enable competition in order to enhance the services provided by the power distribution companies.

Formation Of Apex Body: It also called for the establishment of the National Load Despatch Centre (NLDC), an apex body that will ensure the integrated operation of the power system in the country. It would also monitor grid operations and ensure security of the electricity grid and give directions as necessary to the Regional Load Despatch Centre or the State Load Despatch Centre, accordingly, among other things.

Tariff: It says that in case of distribution of electricity in the same area of supply by two or more distribution licensees, the appropriate commission shall fix the maximum ceiling of tariff and the minimum tariff for retail sale of electricity.

What Are The Implications?

Offering distribution licenses to more than one discom in a particular area has become a point of contention as the AIPEF says that it will lead to private players using public sector networks for distribution. 

As per the statements issued by the AIPEF, the proposed amendment will favor private players as they will distribute power to select profitable industrial consumers, while the responsibility for electricity distribution for all consumers will be on government companies. As a result, the private companies will earn some wheeling profit whereas government companies will become financially insolvent. 

Speaking with news agency PTI, Shailendra Dubey, chairman, AIPEF, said, “As per the bill, only government discoms will have universal power supply obligation therefore private licensees will prefer to supply the electricity in profit-making areas only i.e. industrial and commercial consumers.”

“Thus profit-making areas will be snatched from government discoms and government discoms, by default, will become loss-making companies and in the coming days, will not have money to purchase electricity from generators,” he added.

The government, however, claims that the privatization of the power sector will provide options to the customers to choose power distributors. It also says that the bill aims to provide distribution licenses to private players along with state-owned power distributors or power distribution companies in order to make the power sector sustainable.

In terms of the farmers, Samyukta Kisan Morcha, one of the main farmers' bodies that spearheaded the farmers’ protests, in a recent statement, said, “On December 9, 2021, the government in a letter to the SKM said that on the provisions in the Electricity Amendment Bill which affect farmers, there will be a discussion with all stakeholders. No discussions have taken place in the past eight months and introduction of this bill would amount to a stark betrayal of the farmers by the government.” 

In a separate tweet, Singh said, “Electricity ( Amendment ) Bill, 2022 is pro-people and for the growth of our economy. There is no change in subsidy provisions. The state can give any amount of subsidy, even free power to any category of consumers. No provisions affecting farmers.”