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Home News Power Sector News Indian Electricity Act-2003 A legislation to invite the power sector disarray to dangerous levels

Indian Electricity Act-2003 A legislation to invite the power sector disarray to dangerous levels

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The purpose of the Electricity Billl-2001 is to deregulate Indian Power Industry and finally hand over the system to private operators for making profit. This measure will put the power sector in disarray and the result would be power cost will be raised to unaffordable levels and power crisis will continue to haunt the country. The rural areas would be ignored since the operators will not get sizeable profit. Whatever deficiency is now being experienced is due to the non-implementation of the Electricity Supply Act 1948 strictly. Whatever difficulty is now found could have been corrected with the required amendments in the said Act. Instead this new bill is sought to be enacted without seeking and caring for the opinions from the experts in the field.

The Ministry of Power did not seek the advice CEA in arriving at the decision for the need to enact ERA – 1998. The decision to propose enactment of EB-2001 has also been taken in the same manner. Ministries have used examples of regulators in USA and other countries for CERC and SERC which are not comparable at all. Similarly countries who have surplus generating capacity have been used as examples for policies in India, which has chronic power shortages.

California experience is known the world over. Unplanned development and shortage in generation capacity can exploit the consumers most. Why should consumers and industry bear the increase in tariffs caused due to increasing theft and uncontrolled rise in project cost?

MOP has been using advice of handpicked inexperienced consultants to justify their decisions. They have not shown concern for the impact of their decisions on the supply of power at affordable price and upward revision of tariffs. Ministries are depending on foreign consultants and not using experience and expertise of national and state institutions of CEA and SEBs to find path for reforms. This is proving too costly in terms of inefficiencies and high cost of projects.

Planning commission in Report for Fy 2001-02 states " It is observed from the analysis that financial position of SEBs has deteriorated over the years. In order to enable SEBs to meet the power demand efficiently; they need to become autonomous, professional and commercially viable". This statement after 12 years of reforms shows basic defects in our decision-making system.

Policy of privastisation and focus on urban distribution has hit the rural community and the poor. Electrification of villages and energisation of agricultural pump sets have sharply slowed down during the decades of reforms after Fy 1990-91.

Deregulation/restructuring of retail electricity market isn’t going smoothly anywhere, from Ontario to the UK to the U.S. (with the possible exception of Texas), as per news and notes of Global Energy Business and Technology January/February,2003, Vol.5, No.1.

Although many states and Canadian provinces have pulled back from restructuring following the California crisis, but the Ministry of Power, GOI is in a hurry to enact the new EB-2001 to cover up the violation of E(S) Act 1948. When president issued an ordinance to support Orissa SEBs unbundling effective from 1.4.1996; the country was told by the ministries that it represents model of power sector reforms. Today everyone admits that Orissa reforms failed. Now they say we have learned the lesson and EB-2001 is the solution.

Our economy cannot bear the cost of experimentation with new legislation. Reforms are being pursued for last 12 years. More funds and time is being demanded time and again to bring success, but success is still elusive.

The attitude of IAS cadre and Ministries; doesn’t show concern for public good. In the appointments to the chairman CERC and SERC under ERA-1998; and appointment of chairman CEA (1998-2002) law and natural justice were violated. The Chairman of search committees to select chairpersons of SERC(Rajasthan) and SERC (Karnataka) selected themselves as chairpersons of SERC (Rajasthan) & SERC (Karnataka) respectively. In another case, post of chairman CERC was illegally kept vacant for more than 6 months (above 1 year)and the convener of the selection committee (IAS officer) himself was appointed chairman CERC. In another case, an officer who was not a Member of CEA, on 1st July 2002 was appointed Member of CEA and chairmen CEA at the same time and date, thus circumventing the law. The new chairman CEA, so appointed, reversed the advice of CEA on the proposed Electricity Bill –2001 in an illegal manner. The question is whether those responsible, for providing social and economic justice to people have the freedom to misuse authority?

A Joint secretary (Dist) in MOP assisted by seven PSUs/societies of Govt. who have no experience in Distribution System-Management are controlling the Funds; and thrust on SEBs to serve as Adviser Cum Consultants to SEBs/State Utilities. The specification of equipment’s to be purchased and turnkey contract for execution of works are also being thrust by ACCs on SEBs. It is worth mentioning that in Karnataka conversion of Rate Contracts to Turnkey contract increased the price in Three Distribution circles by 30 to 40%.

So the Bill is framed without proper evaluation and as stated above without using the available expertise in the country and many people are allowed to misuse their authority.

Therefore this Bill is an unwanted legislation.

The above is the collective opinion of the experts in the field.


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