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Home News Power Sector News Amendments in electricity bill will financially ruin Discoms

Amendments in electricity bill will financially ruin Discoms

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LossThe amendments in the electricity bill are not based upon ground realities, but are meant only to watch over the interests of private players and the financially bankrupt state sector Discoms.

The amendments in the electricity bill, which seeks to segregate the power distribution network from electricity supply business, is basically anti-people and does not look at the root cause of the power sector ailments, but only treat the symptoms of problems.

The Electricity (amendment) Distribution bill and retail supply is the most critical link in the electricity market, which interfaces with the end customers and provides revenue for the entire value chain. By separating carriage and content in the power distribution sector, the electricity bill, in one stroke will make all the power utilities in public sector totally unviable.

The Government is likely to move the Electricity (Amendment) bill in the Parliament in the next few days, after approval of the cabinet. If the bill is passed in the Parliament, the tariff would increase by the addition of supply licensees, and the financially bankrupt Discoms would be left only to cater to subsidized consumers and people living below the poverty line. It may be mentioned that service providers will use the already laid out distribution network of state Discoms, without any investment or any responsibility to maintain the network.

The losses of state Discoms have already reached gigantic proportions and are threatening to derail the banking sector. Bank loans to the power sector have already touched the Rs. 2 trillion mark today. But the financial rot in some state electricity boards has only worsened, since banks restructured loans to these entities under the financial restructuring proposal in September 2012. Less than three years later, as the moratorium on principal repayments included in the restructuring packages, comes to an end, bankers are fearing defaults from most of the state electricity boards which accepted the restructuring plan.

The separation of distribution business content and carriage, involves significant costs and may be difficult to reverse. There are risks associated with it, that need to be taken seriously. The issues of the ageing infrastructure, of the distribution network have been acknowledged for quite some time.

The private sector is only interested in profits, by hook or crook. The proposed amendments would give financial benefits to the high end consumers, making the state Discoms to go into further financial distress and make it impossible to provide power to 80 million un-electrified households.

The presence of a large number of suppliers would lead them to categorize electricity consumers into 'priority', 'non-priority' or 'subsidized' category. There would be limited electricity penetration in poorer, agrarian areas of our country, which in turn would mean that people in rural areas, like our farmers and the poor, would end up bearing the brunt of this skewed policy.

The multiple licensee system will help only in "cherry picking" and the deterioration of the incumbent public sector licensees, which will only be responsible for supplying electricity to the unprivileged common man. This simply means nationalizing the losses and privatizing the profits. This competition is possible only in a situation of surplus, not scarcity of electricity, which the country is facing.

The priorities and strategies of development of the states will be different and will also be having their own stakes in deciding the structure of the sector, development strategies and tariff design, including decisions on subsidies and cross subsidies of electricity. Hence, making policy decisions of the central government as mandatory, is against the federal set up of governance and is not proper.

Soirce- Merinews

 

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