The Electricity (Amendment) Bill, 2022, has been sent to the standing committee for consultation with stakeholders amid the Opposition calling it an encroachment into states’ powers and hurting the federal structure.
Provisions of the Bill have been opposed by a number of Opposition-ruled states, including those aimed at allowing customers to have the option to choose electricity suppliers — just like one can choose telephone or internet service providers. The legislation seeks to create competition in the retail segment of the power distribution sector and proposes that a discom (power distribution company) can use other power distribution licensees’ network. It seeks to amend Section 42 of the Act to facilitate non-discriminatory open access to the distribution network of a distribution licensee. It also proposes to amend Section 14 of the Act to facilitate the use of distribution networks by all licensees under provisions of non-discriminatory open access with the objective of “enabling competition, enhancing efficiency of distribution licensees for improving services and ensuring sustainability” of the power sector. The Bill also seeks to strengthen payment security mechanism and give more powers to regulators. “It has become necessary to strengthen the regulatory mechanism, adjudicatory mechanism in the Act and to bring administrative reforms through improved corporate governance of distribution licensees,” according to the Bill.
After the Electricity (Amendment) Bill was introduced in the lower House of Parliament by Power Minister R K Singh, Delhi Chief Minister Arvind Kejriwal tweeted to call the proposed legislation “dangerous”, saying it “will benefit a few power distribution companies.
Kejriwal tweeted in Hindi: “Electricity Amendment Bill is being brought in Lok Sabha today. This law is very dangerous. With this, instead of improving the power problem in the country, it will become more serious. People’s suffering will increase. Only a few companies will benefit. I appeal to the Centre not to bring this in haste.”
The House witnessed unruly scenes with some Opposition MPs showing placards, tearing papers and flinging it into the air.
While Opposition parties like the Congress, the DMK and Left parties sought the withdrawal of the Bill, BJP-friendly parties like the YSRCP and the BJD insisted on wider consultation.
Opposing the introduction of the Bill, N K Premachandran of the RSP said the provisions of the proposed legislation were against the federal structure. “It is an accepted Constitutional position that the basic features of the fundamental characters of the Constitution shall not be amended or altered, but the federal fabric of the Constitution of the country is being altered by particular States of the Union of India not being taken into consideration,” he said, alleging that the Centre did not consult the states on the Bill. Premachandran said ‘power’ as a subject comes under the Concurrent list and it was the “the bounden duty or the mandatory obligation” of the Centre to consult the states.
He added: “The indiscriminate privatisation of the distribution system in the power sector by granting licence to multiple agencies to give service in the same area will result in tariff hike, and that will adversely affect the interest of the ordinary consumers as well as the farmers because they are getting power subsidy.”
Congress’ Manish Tewari objected to the Bill, saying the Bill sought to allow multiple private companies to provide electricity in the same area, a provision that could lead to “privatisation of profits and nationalisation of losses”.
CPI-M’s A M Ariff said the provisions in the proposed Bill were in violation of the Supreme Court judgment of April 2017. The judgment has given the “state enough flexibility to develop their power sector in whatever manner they consider appropriate.” Ariff also pointed out that withdrawal of the Bill was one of the main demands of the year-long farmers’ struggle for which the government had given an assurance. TMC’s Saugata Roy raised the same issue. DMK’s T R Baalu said the Tamil Nadu government was giving free electricity to farmers for the past several years and the proposed amendments could affect “poor farmers” who receive free power.
However, Singh claimed the Opposition members were indulging in “false propaganda” against the Bill, triggering protests from the Opposition benches. “The farmers will continue to get free power. There will be no roll back of subsidy,” Singh said amid calls for wider consultations on the measure. “We have consulted the states and other stakeholders. This Bill is pro-people and pro-farmers,” Singh said as he introduced the Bill.
Opposition MPs staged a walkout as their demands for a division on the motion was denied.
While the BJD agreed with the government’s decision to send it to the standing committee, in which members of all major parties have their presence from both the houses, the YSRCP has a stand that it should be sent to a select committee later to come up with more recommendations.
This also comes amid a renewed debate on the freebie culture and the focus on the mounting dues of power discoms. According to latest government data, discoms of three states – Tamil Nadu, Maharashtra and Telangana – owed about 57 per cent of the total dues to power generating companies, followed by BJP-ruled Uttar Pradeshand Madhya Pradesh and the UT of Jammu & Kashmir, which account for another about 26 per cent of the total dues of Rs 1,14,222 crore owed to power generation companies. Government data updated till March 31, 2022, show that states owe Rs 62,931 crore for services and another Rs 76,337 crore against cost of freebies announced by them to state discoms.
Among the states that have defaulted on payments to discoms, Telangana leads the chart with a cumulative outstanding of Rs 11,915 crore, followed by Maharashtra at Rs 9,131 crore. Uttar Pradesh leads the pack among states that have not made payments to discoms for subsidies at Rs 18,946 crore, followed by Madhya Pradesh at Rs 16,240 crore. While the top three together owe Rs 65,041 crore, the next three BJP-ruled states owe Rs 29,280 crore of the total, according to PRAAPTI (Payment Ratification And Analysis in Power procurement for bringing Transparency in Invoicing of generators) data till July 31, 2022.