Sunday, 19 March 2023 16:07

Talking Point – 2 Roll Back the Electricity Amendment Bill 2022

Written by
Rate this item
(0 votes)


The current struggles of the people of various sections of India against notorious attempts of privatization of electricity might be the most prominent embodiment of Mazdoor-Kisans’ slogan of resistance and defiance. The latest instance is obviously the valiant victory of united struggle of Maharashtra electricity workers and people against the criminal intrusion of Adani in most revenue generating distribution areas.

In November 2021, finally after prolong head-on battle with the corporate-Modi government duo, the historic Kisan struggle compelled the government to bow down and issue written declaration not to go for Electricity (Amendment) Bill along with repealing of three draconian firm laws. But the notorious deceptive government broke its promise under the dictate of its corporate masters by re-introducing the Electricity (Amendment) Bill in 2022. And certainly after that, the focus of all anti-privatisation struggles of electricity sector has now boiled down to the struggle against this autocratic deceiving move of the Central Govt. In clear words, the clear objectives of this Bill are to privatise electricity distribution; to turn already financially stressed state distribution companies sick to gift-over at throw away price to corporate; and to destroy huge public service infrastructure of state DISCOMs built since independence with public money through blood and sweat of the electricity employees. Notoriously disintegrating the generation and transmission utilities, the final prey of private monopoly capital is the state distribution sector.

What was the post Independence power policy of our country? In independent India, State Electricity Boards (SEBs) were constituted for rapid electrification of the country, under the Electricity (Supply) Act, 1948. Their major objective was extending electricity to the entire country, including village electrification, as an essential service for the socio economic development of the country. They were given the task of pump set electrification for irrigation of agricultural fields in the villages, to enhance food production. Around 2 crore pump sets were energised by the SEBs. Because of these efforts, India became a food surplus country from a food-deficit nation. Through seven decades of their service to the country, SEBs and public sector electricity distribution companies (DISCOMS)were able to electrify 6 lakh villages and 25 crore households.

During early days of independence, expansion of electricity sector was conceived as a project of serviceprovider to the entire economy and society, not with profit orientation; it was conceived to be for  promoting industrialisation, expanding MSME segment of the industrial and service economy as largest employment generator outside agriculture, expanding agriculture, horizontally in particular to achieve self-reliance in food production and other areas. Instead of earning profit themselves, the electricity sector was supposed to promote profit-making and employment generating industrial, service and agricultural economy on the one hand and ensure electricity services to every household up to the remotest corner of the country on the other. The onset of neoliberal policy regime acted in sabotaging this national developmental perspective and the corporate-communal-nexus  in governance jumped with fangs and claws finally to destroy the  state-run electricity  distribution network to impose unbearable burden on people and the economy including agriculture only to benefit their handful masters among private corporate, both foreign and domestic.    

Up to late ’80s, the Power-policy in India was focused around developing indigenous and self-reliant electricity expansion programme. With around 10% average annual growth in installed generating capacity and consumption, the average electricity price in the country remained one of the lowest in the world.  Indian indigenous plants and equipments were cheaper by 50% compared to imported system.

With the onset of neoliberal regime, the contribution of the SEBs to the socio economic progress of the country, in providing electricity to the requirements of domestic purposes, agriculture, industry, transport, health, education, science and technology was sought to be negated to disarm and un-popularise the public service. The whole anti-people electricity reform process has to be deciphered in this political context.

The Disastrous 1991 Reform: At this historic juncture of Indian power sector, GoI opened up power generation to private and foreign sector companies. Already Indian Power sector entered into a disastrous path. During mid seventies SEBs had an operating surplus equal to 24% of their revenue earning while by 1990-91 they were incurring financial losses around 30% amounting Rs. 4320 crores. So, it was a 5 fold increase in the tariff but a steep inversion from profit to loss.

Providing quality electricity in adequate measure at minimum costs to the national economy - the fundamental policy objective of the power sector was replaced by the profit-oriented commodification of electricity and wider participation of private sector. Though the tariff was increasing continuously (from 105.4 paise per KWH in 1992-93 to 240 paise per KWH in 2001-02), the steep input cost was raising the gap between average cost of supply (ACS) and average revenue realization (ARR) and hence loss started to mount hugely.

False and Failed projection: Electricity Act (EA) 2003 and National electricity Policy (NEP 2005): The next onslaught on Power Sector came through the imposition of the Electricity Act in 2003. It was meant to distance government from regulation of electricity business with the goal of privatisation and commodification. Generation was de-licensed and a provision for private transmission and distribution licensee was introduced. The Act provided for unbundling (read forceful disintegration of the synergised togetherness of generation-transmission-distribution sector) of the SEBs. This Act entailed the entry of speculation in the electricity industry without any material investment. The Electricity Act, 2003 prescribed the abolition of cross subsidy and the mandate to GoI to wash its hands from the responsibility of rural electrification especially targeting the small and middle peasants of India. In spite of wide scale contractorisation, franchising, and outsourcing it callously failed to provide cheap and affordable electricity to the common people.

Modi Regime: most atrocious onslaught ever: In course of these gross debacles, the current anti-people regime of Modi-Govt. unleashed the final blow on the public electricity sector policy of India. This government is incessantly pursuing the Electricity Amendment Bills since 2014, just after taking charge of the Government. Notoriously Modi government has imposed multiple taxes and duties on coal including royalty on basic price (14%), Goods and Services Tax (5%) and GST Compensation cess (Rs 400 per tonne), corporate taxes and higher railway freight charges. These taxes imposed a huge burden of tariffs to the end consumers. On the other hand, in the name of disastrous 'hair cuts', big corporates are transferring assets among themselves at a hugely discounted liability - the losers being public sector banks and hence the people.

Heinous NITI Ayog’s prescription will destroy the public electricity sector in India: In midst of these, the NITI Ayog 2021 policy paper has blatantly proposed to destroy the state-owned DISCOMs, though globally 70% of the distribution utilities are public owned except the higher-income countries. While promoting de-licensnig (to hand-over the public distribution infrastructure to private players), horizontal un-bundling of the discoms and short-term power procurement, atrociously NITI Ayog has stated “the Act requires that cross-subsidies and surcharges be progressively reduced and eliminated within three years by ensuring that the reduction in cross subsidy is not less than six percent every year.”

The withdrawal of cross subsidy is the last murderous blow on Indian farmers: The cross-subsidy pattern in India was established through long struggle. In India, the heavy industries with large capital and high revenue generation capacity who consume higher quantities of electricity are paying cross subsidy to sustain the agriculture, MSME and household consumers within their affordability. It was pivotal to build India’s food sovereignty and small-medium commodity production network. It assisted the farmers and unemployed youths to survive at least with bare minimum income.  If such support is withdrawn, it will lead to abrupt increase in price of retail electricity, and promote unemployment further, consequent defaults in payment and eventually the forceful disconnections and denial to electricity service.

Irrigation costs will rise. Farmers who are already in an acute agrarian crisis and facing escalating costs of cultivation, facing huge risks will again be pushed to a situation of complete dependence on unpredictable rains for cultivation. A shift to Direct Benefit Transfer (DBT) for agriculture will deny the real cultivators- the landless, tenants/sharecroppers who pay for the electricity. The deceiving case of DBT is already apparent to everyone through the experience of mounting price of cooking gases re-pushing them towards non-LPG fuels.

The Disastrous Electricity Amendment Bill 2022: In course of this whole reform onslaught, the Electricity (Amendment) Bill was brought in. The key Provisions of the Electricity (A) Bill-2022 are: abolition of licenses for distribution i.e. de-licensing of distribution; unbridled grant of permission of distribution to private players just through an application to appropriate commission and the specified qualifications and fees to be prescribed by the Central Government i.e. Infringement in the State Government’s domain; permission to private distribution companies to supply electricity in their choice of areas (read most profitable cherry-picking areas) within Municipal Council or Corporation or revenue district or a smaller area as notified by appropriate Government; distribution can further be entrusted to an individual who need not to register separately; State distribution companies are bounded to provide their distribution infrastructure for use of private distributor almost free of cost.

In a nutshell, private distributors will have to make no investment in creating distribution infrastructure; only have to pay a nominal fee for its use; state DISCOMs will be forced to offer their infrastructure to their competitors; the responsibility of incurring expenditure on maintenance, losses and network development will remain with state DISCOMs. On the other hand, private distributors can demand compensation in case of breakdown; private generators will enjoy advantages as private distributors.

When there are multiple distributors in a territory, the private distributors will offer incentives to lure profitable and large customers initially like telecom sector (especially the example of JIO) and then will enhance the tariff as per their monopoly control over the supply-system. State DISCOMs will not be able to compete due to their universal supply obligation, vast customer base and costs associated with past regulatory gaps. State DISCOMs will be left with small and unprofitable and far-away customers. The losses of state DISCOMs will have to be made up by people’s money. Ultimately DISCOMs will be fully privatized at throw away prices.

This bill will compel the state DISCOMs to be a customer of renewable generation companies while 96% of India’s renewable power production is in private sectors. Failing the targets set by Central Government there is provision of steeper penalty mechanism on state DISCOMs. According to the Bill, supply of electricity to state DISCOMs may be stopped by NLDC if there is any delay in payment and state DISCOMs will be driven out of business. This bill is anti-worker as jobs of 15 lakh workers will be at stake, anti-farmer as it will snatch away the cross subsidy and anti-people as it will increase tariff-rate and deteriorate the services to the remote village areas.

The Unbundling onslaught is the Dictate of Private-Monopoly: The whole recourse to the power reform programmes in India or in Global level exposes the desperate dictate of the WB-IMF to unbundle-disintegrate the state monopoly power sector. The global experience of unbundling is nothing but the privatization of state utilities in throw away prices.

The opening up of commercial energy market, smart metering and renewable generation with real-time purchasing will enhance the fluidity and hence financialisation of electricity service. The whole reform process is private financial monopolisation of the electricity sector. 

The Maharashtra electricity workers explained the danger of Adani intrusion in distribution sector to the people and the people vehemently participated in the struggle. They brought 31 different unions together, made step by step plan to reach all section of workers and consumers, they held massive protests and rallies and finally went for indefinite strike. The government was compelled to bow down. The same resistance took place in Haryana, Chandigarh, J&K or Puducherry. Wherever we could bring all section of workers and the toiling masses in action to resist and defy the corporate run government, the people have emerged victorious. Truly days are coming when the anti-privatisation movement, the movement to save the interest of people and toiling masses can build an army of resistance to fight this corporate communal nexus. And movement to save the Right to Electricity will be cardinal to this. This is a battle India can’t afford to lose.

Let’s join April 5th Mazdoor- Kisan Rally in thousands demanding….

Roll Back the Electricity Amendment Bill 2022!

Roll-Back the Pro Corporate Reforms!

Electricity is not a Commodity but a Right!

Read 2994 times Last modified on Tuesday, 21 March 2023 05:06