Press Release| Bangalore| Dated: 13th May 2020
As the nation and the world struggles with the unplanned lockdown imposed to fight COVID-19, Prime Minister Narendra Modi and his Cabinet Ministers have been promoting a range of structurally serious changes in law and policy that has irreversible impact on fundamental freedoms, labour, economy, people’s lives and livelihoods, on environment and energy security. The Government also introduced new labour codes through ordinances diluting hard fought labour rights, promoted substantive and retrograde changes in environmental regulatory processes, and now it has trained its eyes on substantively amending the Electricity Act, 2003 making it pro-profit without liability for the private sector and dumping all risks and losses on the public.
Electricity (Amendment) Bill 2020 reintroduces reforms which the Government
failed to pass in 2014 and 2018 due to opposition and resistance from various
quarters. This new Bill was proposed on 17th April 2020, despite the entire
nation being in lockdown. Further, it gave merely 21 days for public comment –
when public’s access to their means of expression has been suspended. It is
only because of widespread protests from trade unions and people’s movements
against such undemocratic law making, that the Power Ministry has been
compelled to extend the public commenting period to till 5th June
These are some of the major critiques of the Electricity (Amendment) Bill, 2020 that emerged in a National Consultation organized on 29th April 2020 via video conferencing constrained by the lockdown. The key speakers of the day were Shailendra Dubey and Ashok Rao of All India Power Engineers Federation (AIPEF); Soumya Dutta of Mausam; Leo Saldanha of Environment Support Group (ESG); Tejal Kanitkar who is Associate Professor at National Institute for Advanced Studies (NIAS), Vishnu Rao of Citizen, Civic and Consumer Action Group (CAG), Rajesh Kumar of Centre for Financial Accountability (CFA) and Bhargavi Rao of CFA/ESG. The consultation was organised by CAG, CFA, ESG, MAUSAM, Mahengi Bijli Abhiyan and National Alliance of Peoples Movements (NAPM).
In the consultation Shailendra Dubey speaking for AIPEF held that power generation sector, particularly DISCOMs, have been facing risks from rising Non-Performing Assets (NPAs) over the years, which the government has done nothing to redress. The series of privatisation measures that were initiated under the Electricity Act 2003, is sought to be further intensified by the amendment. It will not only make electricity hard to access by vulnerable communities, but will turn it into a luxury commodity. Therefore, the timing of the amendment is not only suspect, it also appears the Government is attempting to take advantage of the country being in lockdown to push controversial changes to the Electricity Act. He also pointed out that the Bill intends to insert new terminologies into the Act which would be very problematic, particularly in legal contestations.
Ashok Rao of AIPEF spoke of how the amendment’s primary objective is to make the Electricity Act even more compatible with the demands of the sector’s investors, and is thus lopsided against consumers. Attempts at introducing Contract Enforcement Authority are suspect as it may be a means through which fraudulent contracts will find a legal route of enforcement. Rao also expressed his deep worries that the Bill could make the Electricity Regulatory Commissions redundant as most powers were proposed to be vested with Electricity Authority. Grievance redressal for a large part of the population will thus become inaccessible in case this comes to fruition.
Leo Saldanha’s observed that the bill disregards and jeopardises the very democratic and federal nature of this country. 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 partner in building energy security. But what this amendment is attempting to do is to rupture this partnership in favour of concentrating power with the Centre.
The promotion of National Renewable Energy Policy through this amendment is also worrying as it expressly promotes hydro power as renewable, though it is well known that major dams destroy rivers, even dry them up. This when the amendment does not allay fears that farming and common land resources are being monopolized to promote utility scale solar, wind or other forms of renewable energy, including also biomass, and without appreciating their long term social and environmental impacts.
Vishnu Rao analysed operational aspects of Electricity Contract Authority (ECA) and Central/State Electricity Regulatory Commissions (CERC/SERC). The proposed amendment particularly with the establishment of ECA would not only concentrate power with the Centre, but would turn SERC’s into mere overseers of 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 in key positions, resulting in merger of neighbouring SERC’s and thus defeating the very purpose for which they were constituted. The proposed amendment promotes the Renewable Purchase Obligation (RPO) where the state utilities would have to pay a penalty for contract failures and is a contentious issue. He argued that the removal of cross subsidies and adoption of cost reflective tariff will deeply hurt the end consumer.
Soumya Dutta said that the whole focus of the amendment bill is very clearly to make electricity a commodity rather than a service. But what also needs to be highlighted are questions such as why 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. This is the first time that Hydro power has been introduced in an electricity bill he highlighted. This categorisation of hydro power projects as renewable should be opposed and big hydro power plants must most certainly be removed from the renewal category. He also added that extensive electrification of the energy basket should be questioned in light of climate change, air pollution and local pollution that is caused from electricity production based on extractive industries, such as coal mining.
Tejal Kanitkar said if the country is already in a state of surplus of renewable energy then what is the need to focus on further generation and distribution of energy. She held that the new bill eliminates cross-subsidies and this somehow shifts the burden on to 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 govt to see that privatisation would in no way eliminate or reduce costs, and second, the process of franchisee selection will be done out rightly 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.
Overall, the Consultation came to the conclusion that this Bill proposes the same failed Private-Public-Partnership model promoted by the World Bank, an euphemism for privatization of public resources and assets to promote private profits, especially in energy production and transmission. The Bill proposes to once more push for the disastrously failed model of privatisation of DISCOMS, which is sought to be done through the promotion of franchises in the distribution sector. Besides, the Bill proposes that tariff will be determined by the Central Electricity Authority on a cost basis, rather than competitive bid basis. Not only does this take away the power vested in the State Electricity Regulatory Commissions, but it also centralizes decision making and in all likelihood could increase tariff rate which will be forcibly recovered from consumers. The proposed Bill also encroaches independent decision making powers of State Governments and is a direct threat to federated governance in India. All things considered, this anti-people and anti-national Bill must be comprehensively relegated to the dustbins of history.
The speakers strongly recommended that the government should reconsider over this bill.