ELECTRICITY AMENDMENT BILL-2021

From being called as ‘anti-people’ to ‘not in the interest of the country’, the electricity amendment bill-2021 has already been critiqued with words. The electricity amendment bill 2021 announced by the Finance Minister Nirmala Sitharam in the union budget has come under heavy fire and opposition from the states even before it has been introduced in the assembly. With Shiv Sena MP Sanjay Raut and West Bengal Chief Minister Mamata Banerjee have voiced their concerns over the bill yet to be brought before the Parliament. So, what is this bill, which is creating havoc even before getting a proper initiation?

The main aim of the bill is to de-license power distribution, which would allow private sector players to enter this field and compete with state-owned power distribution companies (discoms). This will provide the consumers with a choice among the power distribution companies. Finance Minister Nirmala Sitharaman had said that the government would bring a framework to allow consumers to choose between power distributions companies, according to The Indian Express.

State owned distribution companies have a strong hold on the power distribution in most of states across India with few exceptional cities like Delhi, Mumbai and Ahmedabad.

At present, discoms are toiling with proliferating level of loses and debts. To reduce their burdens, the government has decided to shortlist couple of schemes to restructure the outstanding debts of discoms while encouraging them to reduce losses. This however, brought only short term relief in terms of financial spaces for discoms that continued to amass losses and debts post restructuring schemes such as the UDAY scheme an initiative launched by the union government in 2015.

The states are opposing this bill as they are concerned about the biased distribution of energy by these private players, who might provide power to only commercial and industrial consumers and not residential and agricultural consumers. Power tariffs across India, today, vary vastly with commercial and industrial players cross subside the power consumption of rural residential consumers and agricultural consumers by paying far higher tariffs.

Mamata Banerjee in her letter to PM addressing this issue states that the amendment would lead to “a concentration of private, profit-focussed utility players in the lucrative urban-industrial segments while poor and rural consumers would be left to be tended by public sector discoms.”

“How is it possible for discoms to continue to operate if all their industrial commercials are taken over by the private sector?,” said an expert stated adding that earlier plans to introduce private sector players had also envisaged a gradual reduction in cross-subsidy levels which have not materialized as reported by The Indian Express.

Some other pertinent points that are voiced by the state governments are higher penalties for failure to meet Renewable energy Purchase Obligations (RPOs) and the requirement that Regional Load Dispatch Centres and State Load Dispatch Centres follow instructions by the National Load Dispatch Centre.

In her letter to the PM, Mamata Banerjee has requested “to ensure that a broad-based and transparent dialogue on the subject is opened up at the earliest”.