As India struggles through battling a pandemic and subsequent shut down, the government seems to be in no mood on pausing in stifling controversial issues that majorly impact the economy of the country. After introducing the labour codes through ordinances, the electricity act is being amended as well, which according to experts is going to have significant impact on people and livelihood of many.
According to experts the controversial amendment bill reintroduces reforms which could not be passed in 2014 and 2018 due to opposition and resistance from various quarters. These amendments were proposed on 17th April and people have been given 21 days to respond to them.
The bill proposes the same PPP model of the World Bank which according to many has been a failure. The bill is also proposing the privatisation of DISCOMs in name of franchises in the distribution sector. The tariff will be determined by the Central Commission on a cost basis rather than a competitive basis which will increase the tariff rate and the increased rate will be recovered from consumers. Experts argue that the proposed bill will take away all the powers of the states.
To discuss and critique these proposed amendments a national consultation of the said amendment was held on 29th of April 2020 via Zoom video conferencing. The key speakers included Shailendra Dubey, AIPEF; Ashok Rao, AIPEF; Soumya Dutta, Mausam; Leo Saldanha, ESG; Tejal Kanitar, NIAS; Vishnu Rao, CAG; Rajesh Kumar, CFA and Bhargavi Rao, CFA/ESG. The national consultation was organised by CAG, CFA, ESG, MAUSAM, Mahengi Bijli Abhiyan, NAPM.
The speakers contended that, at a time when people are without job, food, money or access to basic medical facilities, the Government of India is hard at work modifying important laws of the land. According to them, what should have been the time to fight a pandemic situation that appears to be going out of control in the country with every passing day, the greater focus of this government has been to alter all kinds of laws ranging from the environment to labour and now something as basic as access to electricity. Speaking specifically of the power generation sector and DISCOMs, the guests stated that, they have been facing increasingly rising NPAs over the years, which the government has done nothing to redress. The series of privatisation measures that were initiated by the electricity law of 2003, is set to be further intensified by the amendment that this government is attempting to bring through the Electricity (Amendment) Bill 2020. It will not only make electricity hard to access by vulnerable communities but in fact turn it into a luxury commodity that only a few can afford. The speakers questioned the timing of the bill arguing that, the timing of the amendment is not only matter of suspicion but that it also appears the Government is attempting to take advantage of the country being in lockdown to push controversial changes into the Electricity Act.
In his statement Shailendra Dubey pointed out the new bill attempts at inserting new terminologies into the Act. Dubeyji said that this is a very problematic move since it is well understood that when such a thing happens it becomes extremely difficult to argue against them in courts. Dubeyji also made observations about how power of the people is being eroded through this amendment which seeks to make Electricity Regulatory Commission redundant and all powers vested with the proposed Electricity Authority. He lamented that grievance redressal for a large part of the population will become inaccessible in case this comes to fruition.
Leo Saldanha’s observations were on how this bill disregards and jeopardises the very democratic and federal nature of this country. According to Leo the present Electricity Act mandates that the centre leads the planning of building of energy infrastructure, in which electricity is a component, in a manner the states and the centre work together. In fact there is a separate chapter in the current Act which requires engagement of panchayats and municipalities, the third tier of constitutional governance. So the Act acknowledges the third tier of governance as critical partners. But what according to Leo this amendment is attempting to do is to rupture this partnership deal in favour of concentrating power with the government at the centre.
The National Renewable Energy Policy which this amendment accommodates, has also raised many eyebrows. The amendment does not allay fears that monopolising of farming and common land resources will not happen through the pushing of solar, wind or other forms of renewable energy parks under the proposed renewable energy policy.
Ashoke Rao spoke of how the amendment’s primary objective is to make the Electricity Act even more compatible with the demand of the sector’s investors. Rao said, that attempts at introducing Contract Enforcement Authority are suspect as it may be the means through which fraudulent contracts will find a legal route of enforcement.
Vishnu Rao highlighted the operational aspects of Electricity Contract Authority (ECA) and Central/State Electricity Regulatory Commissions (CERC/SERC). Vishnu argued that with the setup of ECA and centralisation of power, SERC will end up only setting tariffs and doing administration type work. Citing the example of TNERC, he said that the majority of work with the commission was regarding contracts, while rest of it was related to tariff disputes and other consumer grievances. Another problematic provision with regard to the SERCs was that of them being clubbed together in case of vacancies. For example, if there is a vacancy in the TNERC that is not fulfilled, it could be clubbed together with an ERC of a neighbouring state, making it more inaccessible to the general public. The proposed amendment in the Renewable Purchase Obligation (RPO) where the state utilities would have to pay a penalty for contract failures was flagged as a contentious issue. He said that removal of cross subsidies and adoption of cost reflective tariff will deeply hurt the end consumer by taking the power sector towards uniform price for consumption.
Soumya Dutta said that the whole focus of the amendment bill is very clearly to make electricity a commodity rather than a service. But according to Soumya, what also needs to be highlighted are questions like whether the country needs to produce as much electricity as the bill proposes, which sections of the society will be affected if the country goes for such productions and what will be the nature of the source of such energy productions. Soumya asserted that this is the first time that Hydro power has been introduced in an electricity bill. This categorisation of hydro power projects as renewable should be opposed and have big hydro power plants removed from the renewal category. He also added that extensive electrification of the energy basket should be questioned in light of situations like climate change, air pollution and local pollution from extractive industries like coal mining.
Tejal Kanitkar asked, “if the country is already in a state of surplus of renewable energy then why does it still continue to focus on its generation and distribution?” Tejal pointed out that the new bill eliminates cross-subsidies and this somehow shifts the burden on the pockets of the states’ which do not have sufficient funds. In this proposal to privatise the electric supply distribution, Kanitkar identifies two major loopholes. First, the failure of the government to see that privatisation would in no way eliminate or reduce costs and second, the process of franchisee selection will be done outrightly in a manner of cherry picking as no private distributor is going to be interested in supplying to the rural sector due to subsidies and low revenue.
With so many aspects of the amendment raising considerable doubts and concerns, the speakers unanimously agreed that the amendment proposal should be reconsidered by the Government of India.