The Narendra Modi government has been facing flak from the opposition over the introduction of the Electricity Amendment Bill 2021, even before it is brought up for discussion in the parliament. The bill attempts to de-license power distribution and facilitate the entry of private companies, allowing them to compete with state-owned power distribution companies (discoms). In spirit, the move would allow consumers to choose between power distribution companies. However, the opposition led by West Bengal Chief Minister Mamata Banerjee has opened a front against the government, fearing that the cash cow sector will be snatched from the state.
Mamata Banerjee has written to the Prime Minister requesting that the Bill not be brought before Parliament claiming it is “anti-people” and would promote crony capitalism.
She wrote in the letter, “The dilution of the role of the State Electricity Regulatory Commission and the State Distribution Companies implies a political design to demolish state bodies and domestic industries. Direct interference by the Central Government in activities involving distribution will not at all be helpful to take care of the interest of the common people and the States.”
Mamta Banerjee CM WB writes to PM Narendra Modi against Electricity (Amendment) Bill 2021 pic.twitter.com/qlrOxM9ZF9
— उ.प्र. राज्य विद्युत परिषद अभियंता संघ,आज़मगढ़ (@UPRVPAS_AZMGRH) August 8, 2021
Similarly, Shiv Sena leader Sanjay Raut, stated that the bill was not in the interest of the country, and states were not consulted on its provisions. He said, “The provisions ring a danger bell for state electricity companies. Our party is holding consultations in this regard,”
Power sector employees in Madhya Pradesh and Uttar Pradesh have also raised their voices against the Bill. According to the All India Power Engineers Federation, power sector employees in Uttar Pradesh have threatened to go on strike or a no work protest on August 10 against the Bill.
As reported by TFI, among the 17 bills that the Union government had listed for the Monsoon session of the parliament, The Electricity (Amendment) Bill, 2021, perhaps has invited the most attention from the opposition.
It is pertinent to note that power distribution in most of the country is currently controlled by state-owned distribution companies with some cities including Delhi, Mumbai and Ahmedabad being exceptions where private players operate power distribution.
India does excellently in terms of power generation and per unit generation as it is one of the lowest in the world, however, the performance in distribution is dismal – thanks to the monopoly of state government-owned distribution companies.
On one hand, India generates surplus electricity with solar, coal, and other resources at a rate that would put highly efficient players across the world to shame, but on other aggregates, technical and commercial (AT&C) loss is around 21.7 per cent — a shameful figure indeed.
Thus, more than one-fifth of the value is destroyed in AT&C losses during distribution and this figure is rising. According to a World Bank report, the efficiency gap in the power sector costs the Indian economy about 4 per cent of GDP a year, equivalent to $86 billion in the fiscal year 2016.
The losses of discoms stood at Rs 33,894 crore in FY17, Rs 29,452 crore in FY18, and jumped to Rs 49,623 crore in FY19, according to the data provided in Lok Sabha. The finances of the discoms would have been worse in FY21, had the Centre not announced the Rs 1.25-lakh-crore loan package to clear the dues of power generators.
The introduction of private players can effortlessly fix this problem. Private entities are known for being cost-saving, minimizing losses using creativity and innovation. And if they manage to create a seamless distribution service, the public would naturally levitate towards them, leaving the discoms battling for survival or if we perceive the jar half-full – pushing them to improve their services.
Speaking of discoms, we all remember the kind of problems the consumers used to face before changing the telecom operator from one company to another. From not responding to complaints to not even caring for the woes of the consumers, the telecom sector has come a long way.
Once the sector was privatized in the country, the consumers had multiple options, and later Telecom Regulatory Authority of India forced them to bring simple portability standards. Today, one can port the same contact to another telecom operator without any hassles.
Even the private players that siphoned off the consumers with hefty bills have had to do away with their modus operandi after the introduction of another private company, i.e. Jio. Hence, the checks and balances in a private competition ultimately help the consumer.
With the Electricity Bill 2021, the central government will be making such portability easier. With more private players running the show, it will be a contest to perform or perish.
Similarly, when in the hands of State and state-owned regulators, there is often a feeling of lethargy and complacency which ultimately becomes the characteristic ‘defining’ trait of such organizations.
Filing a complaint or merely calling and asking about the status of a power cut appears a Sisyphean task. The power operators do not pick calls, cut the power unnecessarily at unscheduled times and most importantly, there is no transparency or accountability over their actions.
This is a form of corruption that has fettered for long and we as the public have legitimized the behaviour. Moreover, the sector is littered with corruption, including in the tendering process of materials and important supplies for the industry where the process is completely hijacked by the state governments in favour of their favourite Babus.
The state governments are a major accomplice in allowing the behaviour. It doesn’t take much to figure out why state governments and electricity unions are against the bill. If the state loses its hold over the money-minting sector, the corruption transpiring under the table will not fill the coffers of the political parties.
The government must push against the unions and implement the power sector reforms as soon as possible. India still has one of the lowest electricity consumption per capita, and since power consumption is directly proportional to GDP growth, the government is trying to reform the sector. Hence, the mighty objection to the bill without reading the fine print and the rationale behind introducing it.