The Central government's proposed amendment to the Electricity Act 2003 will make state power utilities like TANGEDCO in Tamil Nadu unviable and private players will get a free hand in power supply, a senior trade union leader has alleged.
"Amendment to Electricity Act proposed by the Centre will render State run power utilities like Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) unviable and eventually shatter them," CITU-affiliated Central Organisation of Tamil Nadu Electricity Employees' Convener S S Subramanian told PTI.
The Union government has proposed to bring in amendment to the Electricity Act 2003 for "promoting competition, efficiency in operations and improvement in quality of electricity supply."
Nine trade unions of state-run power corporation TANGEDCO including the CITU-affiliated union will go on strike this month on the day Parliament takes up the Bill as part of a national stir, against the proposed amendment.
One of the proposals of the Amendment Bill is to issue separate licence for supply of power and open up further the provision of open access.
Subramanian said one of the serious issues would be the separation of "carriage and content."
"Under this provision, private players will be allowed in electricity supply to consumers and private suppliers will naturally cherry pick and this is going to be disastrous for consumers, employees and the government run TANGEDCO," he said.
Also, such private entities will tend to choose only high value consumers, industries and users in urban areas, he argued adding State utility will then be relegated to supplying power to only subsidised categories like agriculture connections, huts and others.
"So, if private players take away profit bringing consumers and leave TANGEDCO like government utilities to cater to only non-profit categories, will they be able to sustain," he asked.
"There is also a real risk of rural areas getting not serviced and State's rights and powers in several operational areas will just go," he added.
Stating that government-run utilities were already facing financial challenges, Subramanian said the proposed move would make them "much more vulnerable and later make them fold up."
Referring to a letter written to Prime Minister Narendra Modi by Tamil Nadu's former Chief Minister O Panneerselvam (now Finance Minister) in December last year, he said "it was pointed in the letter that it was a skewed amendment."
"In that letter he made it clear that the move was against the federal feature of the Constitution," he said.
In his letter, Panneerselvam had said, "these draft amendments seek to bring significant changes without taking the States into confidence...such a skewed amendment without proper consultation with States is totally against the federal spirit of Constitution and Co-operative federalism which you have been espousing."
"By separating carriage and content in the distribution sector, this Bill, in one stroke will make all power utilities in the public sector totally unviable."
Flagging the issue of supply licence, he had said, "without any investment in the distribution network or any responsibility to maintain the network, the proposed supply licensees would be able to access all the high value customers."
However, the Union Power Ministry, in a release had said the amendment is to "achieve efficiency and for giving choice to consumers through competition in different segments of electricity market."