Reforms in the power distribution sector may have to wait as amendments to the Electricity Act cannot be presented pending the report of the Standing Committee. "The Standing Committee will give its report on the proposed Electricity (Amendment) Bill 2014 by April and then we can introduce it in Parliament," Power Minister Piyush Goyal told PTI.
The Minister said the proposed bill will be introduced post recess in the Budget session of Parliament.
The recess of close to three weeks is the time when parliamentary standing committees study ministry-specific demands for grants.
It is only after consideration of the standing committees that these demands for grants are brought before both the Houses, discussed, and then passed.
Cabinet, last month, approved various amendments to the existing Electricity Act 2003, aimed at enabling consumers to choose their electricity supplier, among other reforms.
The proposed amendment has invented the fifth wheel in the form of sale of electricity which is to be unbunbled from distribution of electricity. The aim of the proposal is rather simple. Allow new private players entry into electricity distribution sector without the burden of setting up and maintaining the distribution infrastructure. Cherry picking of high value consumers by the new entrants is explicitly allowed through the amendments. This is achieved through amendments in the express provisions in the existing Act, which inhibited such cherry picking. Thus the existing distribution utilities which will continue to be the deemed sales licensee for a short period and the successor sales utilities in the public sector will be burdened with the low value consumer segment which is huge in number and the new entrants can flurt with the few high value consumers.
The game plan is simple and evident. Let the high value consumers who are already paying at par with or higher than the cost of electricity (due to inbuilt cross subsidy in tariff) be served through new entrants in the electricity sales business, which could be a win-win situation for both the new entrant and the high value consumers. This segment is expected to breed the thirst for profit of the operators in the power market. Yes, the traders could/must act as sales licensee also to penetrate among high value consumers and achieve direct sales from the mushrooming power market. At the same time let the successor sales licensees of the incumbent distribution licensees be burdened with low value consumers and the high prices derived in the bulk power market. Of course, the reformists will get a new whipping boy; instead of the present distribution utilities, the newly unbundled sales licensees in the public sector.
And if something goes wrong ? The new entrants can wash their hands and leave the sector since virtually no investment has been made by them. This is the magic of leoliberalism. The slogan is 'remove entry and exit barriers' for private capital so that the markets can flourish.