Snippets from Energy Sector– October 2020

Temporary success resisting privatisation of power in Uttar Pradesh

Since April 2020, power sector trade unions have been protesting across the country against the proposed draft of Electricity Amendment Bill 2020 (EAB). The draft is yet to be approved in the parliament. However, the Uttar Pradesh government went ahead to propose the privatisation of one of its discoms company, Purvanchal Vidyut Vitran Nigam Limited. As a result, the trade unions of UP intensified their protest in October. More than 15 lakh employees went on an indefinite strike for two days to oppose privatisation. Which led to power cuts in the entire state. This gave a big jolt to the capital city, Lucknow. Eventually, the state government was compelled to agree to the demands and postpone its plan to privatize power distribution companies. An agreement was signed between the state Power Minister and UP Power Employees Sangharsh Committee to postpone the privatisation of the Purvanchal power utility, until March next year. However, UP Power Corp Ltd chairman refused to sign the agreement, leading to continuation of protests by discoms employees.

Gaps in the Standards Bidding Documents developed by the Centre

Meanwhile, the Centre is forcing the state to privatise discoms companies. It has already drafted a standard bidding document (SBD). The SBD itself has many practical gaps. The state’s discoms companies signed many PPAs of various power sources for different time periods at different tariff rates. UP government has signed 26,000 MW PPA but its average load of all discoms is around 14,000 MW. Like UP’s 85 per cent power comes from thermal, 12 percent from renewable and rest from hydro and nuclear. How the government will deal with these issues. Many legal aspects are also missing. One of them is to take prior approval from the commission before the sale, lease, or exchange under section 17(3) of the Electricity Act 2003. But it has been completely left out from the outlined of SBD.   

Jio entering into smart metering business

Additionally, India’s electricity smart metering programme is growing and it is the largest in the world. The smart meter is internet-based devices. It can be controlled digitally. Reliance Industries Ltd. has recently announced that it would enter the smart metering business. Its subsidiary, Jio platform has signed multi-billion deals to control electricity meter data, communication cards, and telecom and host service to discoms companies. Now Jio is not limited to the telecom world only it has entered the all-digital ecosystem market from Jio cinema to Jio payment bank. The Union Finance Minister already built the ground for this during her budget speech this year. She announced all states and union territories (UTs) to replace the conventional meters with smart prepaid meters over the next three years. It was a deliberate announcement in order to open up Advance Metering Infrastructure (AMI) business market for large corporates like Reliance, Adani, etc.

JBIC financing for NTPC’s Capex

NTPC  has recently signed an agreement with Japan Bank for International Cooperation (JBIC) for a loan worth Rs 3,500 crore. According to the agreement, JBIC will provide 60 percent of the loan amount. The balance amount will be extended by commercial banks namely Sumitomo Mitsui Banking Corporation, Bank of Yokohama, San-In Godo Bank, Joyo Bank, and Nanto Bank, under the JBIC guarantee. The loan will be in foreign currency under the facility of JBIC’s Global Action for Reconciling Economic Growth and Environment Preservation (GREEN). This is the first loan for NTPC under JBIC’s GREEN operations in India. The loan will be utilized by the company for funding its capex for Flue Gas Desulphurization (FGD) of thermal power plants and renewable energy projects.

NTPC planning to build industry hub within its power plant

Further, NTPC has acquired thousands of acres of land in the name of building power plants across India. But it has always grabbed more than what it had required to build each plant. As a result, thousands of people were forced to be displace from their land and livelihoods. Now, these lands are lying empty. Now NTPC has thrown open a vast land bank within its power plants. The company is planning to build a manufacturing industrial park on this land within its power plants. Even, it has invited expression of interest from MSMEs and other Indian companies. It is planning to set up energy-intensive manufacturing plants. It is also planning to build bulk chemical hubs like ammonia, urea, gypsum, geopolymer, cooling and heating solutions, aluminium and mineral processing like ceramics, tiles, pottery, brick, and glass within its plant. Pilot projects are going to be developed in Gaderwara and Solapur Power plants. NTPC will arrange land, water, electricity and other infrastructural facilities.

More than one lakh people dying every year due to coal in India

A Netherlands-based publishing company Elsevier published a study in “Ecological Economics,”which found that coal is killing more than lakh of people every year in India. Air pollution from coal is one of the main causes of premature mortality. India’s dependence on coal is increasing faster than any other country (6 per cent a year). Coal extraction has doubled. Workers and people living around the coal mining areas are forced to inhale coal dust and drink polluted water. In addition, mining accidents are also killing thousands of lives. More than 7,000 accidents were recorded from 2001 to 2014 across all coal mines in India. In addition to that more than 200 coal miners have lost their lives from 2015 to 2017 in such accidents. The authors questioned that despite an increase in renewable sources of energy, India continues to depend on coal. Both hydroelectricity and nuclear are being promoted as sources of energy production in India, and both result in socio-ecological justice movements. “What we argue in the article is that there is no transition but rather an addition of the different energy sources, and coal continues to dominate the energy mix, despite the rhetoric of renewables and the climate crisis,” said author Brototi Roy, from the Universitat Autònoma de Barcelona.

MDBs financing non-concessional loan in the name of climate finance

In another report published by Oxfam “Climate Finance Shadow” found that climate finance is an overlooked scandal. In the name of climate finance, the world’s poorest countries and communities are forced to take out loans and non-concessional finance. In 2017-18, majority of public climate finance has gone to Least Developed Countries (LDC) and around half of the climate finance to Small Island Developing State (SIDS). Around 40% of public climate finance is non-concessional loan and finance. It is increasing the unnecessary and unsustainable burden of debt levels on poor countries. Multilateral Development banks (MDBs) have financed $25 billion dollars which is over 40% of the total reported public finance. This is a significant share of climate finance towards the goal of $100 billion per year. However, MDBs and bilateral climate finance have overlooked the transparency and accountability in this process. Along with bilateral climate finance, MDBs need to be transparent and accountable in climate financing to poor countries.  

A campaign against the World Bank’s investment in fossil fuel projects

The World Bank held its annual meeting virtually in October 2020. Through social media campaigns Civil societies condemned the World Bank’s investment in fossil fuel across the world in different countries.. Meanwhile, Indian CSOs also protested against the World Bank, through a coherent social media campaign namely “World without World Bank”. Research by Urgewald also proved that since the Paris Agreement, WBG invested more than $12 billion in fossil fuel, $10.5 billion of that are new direct fossil fuel project finance. It has financed 11 types of operations. WBG is financing India under three operations, including upstream oil and gas exploration, Liquefied Natural Gas (LNG) Processing & LNG-to-Power, and gas storage and distribution. It signifies that the World Bank is shifting its strategies to invest in oil and gas instead of coal in India.

It has been observed that the government has pre-decided to open up each section of the power sector for private companies. The government is forcing the state to privatize the discoms. The power sector unions and workers are still resisting it strongly and have been giving a very tough fight to the Centre across the country against the privatisation. Indian power giant, NTPC is not only shifting from coal to green energy, but it also plans to build a manufacturing industry hub within its power plant. Looking at the history of accidents in the NTPC’s plants, the proposal of making a chemical hub within its plant would be highly dangerous for workers and communities living around it. Despite India being the 3rd largest renewable energy producer in the world, coal is dominating in India. It is killing more than one lakh people every year. Despite the pandemic, International financial institutions continue financing the energy sector in India. In the name of climate finance, they are providing loans and non-concessional finance to the countries. The World Bank is investing in oil and gas instead of coal in India. This needs to be monitored very closely with climate finance and investments in India.