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Home News Power Sector News Will the government's new bill fix India's electricity problems? Power sector unions disagree

Will the government's new bill fix India's electricity problems? Power sector unions disagree

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StrikePower sector unions on 02-12-2015 deferred a one-day strike scheduled for December 8 over the Union government's attempts to push the contentious Electricity Act (Amendment) Bill 2014 in the ongoing winter session of Parliament.

The move came after the central government initiated talks with power sector unions late on Tuesday. Piyush Goyal, the minister of state for power, assured the unions of a consultation.

Around 20 lakh engineers and workers in the power sector were expected to participate in the strike, the biggest since December 2000.

The unions are opposing the Union government's bid to amend the Electricity Act, 2003, arguing that the proposed changes will make state power utilities bankrupt. They feel that the amendments will lead to situation where public sector utilities will have to shoulder the burden of supplying to poor consumers in remote areas, even as private players make profits in commercially viable regions using the distribution system already laid out by the government.

State power utilities are already accruing huge losses, as they sell electricity below the cost of supply. In some states, they even have to supply free electricity to farmers. These utilities record transmission and distribution losses (including pilferage) of almost 25%, which is double the global average.

Proposed changes

Power theft and non-payment of bills are common, with poor recovery even from affluent consumers. Since electricity is supplied at a loss, distribution companies lack any incentive to extend the power network. More than 27 crore people, nearly a fourth of India's population, have no access to electricity. The government claims its proposed changes will help address the problems of recovery and power theft because of the lack of accountability of public sector providers.

State governments currently issue one distribution license both for maintenance of the distribution network as well as the supply of electricity. Among the main changes, the bill seeks to segregate the power distribution network from electricity supply business. It provides for separate licenses for maintaining the distribution and for supply of electricity.

According to PRS Legislative Research's analysis of the bill draft, the State Electricity Regulatory Commissions will grant supply licenses and consumers will choose to buy electricity from any of the supply licensees in an area.

Shailendra Dubey, chairperson of the All India Power Engineers Federation, said this change will make all the state-owned power distribution companies, or discoms, financially unviable. "Right now, public utilities provide electricity to very poor families as well as big industry," he said. "This allows public companies to cross-subsidise operations. Once several licensees come in and retail supply is made separate from regular electricity supply, we will lose the higher-end consumers, as well as the interface with the end customers which provides revenue for the entire value chain."

Further, the bill provides that when a company ceases to be supply licensee, or its license is suspended, electricity in an area will be supplied by a "provider of last resort".

Levelling the field

The unions say this implies that public sector utilities will invariably be asked to be the provider of last resort, even as the bill does not provide any financial support to them for this purpose. In its report in May, the parliamentary committee on energy led by Bharatiya Janata Party MP Kirit Somaiya had recommended that this responsibility should be borne by all supply licensees, whether public or private, to ensure a level playing field.

Representatives of power sector unions had discussed the issue with power minister Piyush Goyal earlier in November in Kerala. In a public statement then, the unions said that the minister had agreed to include changes suggested by them to draft of the Bill and had said that the government will include and upload a modified version of the Bill on the ministry's website before the start of the winter session of parliament. However, this was not done, pushing the unions to call for a countrywide strike. Now, union leaders said they will decide their next course of action based on the talks scheduled for December 4.

While electricity supply across the country would not be interrupted in the event of a strike, any complaints regarding irregular supply or power cuts would not be addressed for the duration of the stir.

Source- Scroll

 

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