No. 06 - 2020 / Reform 30 - 01 - 2020
Sri R K SINGH
Hon'ble Power & Renewable Energy Minister
Shram Shakti Bhawan
New Delhi
Sub : AIPEF to be given time for discussion before declaring any further amendments or changes in Electricity Act 2003 to introduce multiple supply licensee or franchisee.
Respected Sir,
It is learnt through news papers that Central Government is going to introduce some changes or amendments in Electricity Act 2003 to introduce multiple supply licensee or franchisee by way of segregating carriage and content in present distribution system.
2. As per reports in news papers according to new plan Government proposes grant of Rs 1.1 lakh crore for State Discoms
The government plans a grant of over Rs 1.1 lakh crore to state power distribution companies under a new bailout scheme that would mandate discoms with high losses to either privatise operations or appoint distribution franchisees. The scheme proposed is to be named as Atal Distribution System Improvement Yojana, or Aditya, is likely to come up in the upcoming budget since the previous Ujwal Discom Assurance Yojna is expiring in March 2020.The first part envisages infrastructure upgradation including implementation of smart metering at a total outlay of Rs 2,30,000 crore, of which 15% is proposed to be supported by the central government and 10% by the state. The Centre’ share of funding is likely to be to the tune of Rs 25,000 crore, the official said. The second part would require discoms to undergo institutional reforms in form of franchise to avail investment support. The scheme envisages lowering aggregate technical and commercial losses of discoms to 12% and eliminating gaps between their costs and revenue. Government data shows the average commercial losses of discoms at 21.35% and the revenue gap at 0.38 paise per unit of power.The discoms will have to choose to either operate under a public-private-partnership model or supply power through multiple franchisees in all circles of operation within nine months of joining the scheme.
3. In above context AIPEF wants to draw your kind attention as following ---
a). That Electricity is a no longer just a vital infrastructure, but a fundamental right of the people.
b). That the financial stress in the industry cannot just be blamed on DISCOMS alone, but must be analysed in depth and a multi sectoral perspective to bring out contribution of all the players in the industry.
c). That there should be a review of the Electricity Act 2003. For example the Electricity Act 2003 removed the techno-economic approval of the CEA, the consequence was 34 stressed thermal power plants.
d). Induction of large scale renewable energy solar power plants are being done without concern for economics of transmission and Grid stability.
e). The PPAs entered into in the past need to be renegotiated for the survival of the electrical power supply industry.
f). Implications of imported coal tariff being a pass through has serious consequences and must be addressed.
g). Systematic dilution of the role and responsibilities of the State Goevrnment.
h). The Bill should be modified to create a GST council type of structure so that the States and Center can play a vital role in policy/decision making.
i). Splitting carraige and content without learning from the experienecs of failure of franchisee and without detailing the cost implication of implementing the splitting of carriage and content has serious consequences.
j). Majority of the electricity consumers are poor and do not have the purchasing power, yet electricity has become vital for survival, therefore social concerns cannot be divorced from concerns of investors.
4. Therefore AIPEF requests you to kindly give time for discussion before declaring any further amendments or changes to introduce multiple supply licensee or franchisee or PPP Model in electricity supply.
Thanking you with regards.
Sincerely Yours
Shailendra Dubey
Chairman