The year 2021 has been a year of ups and downs for the Power Sector and Employees/Engineers organizations. At the end of the year, the way in which the Central Government had to kneel in front of the farmers' movement which lasted for a year is certainly an unmatched story of struggle. Revolutionary salutations to farmers historical struggle.
At the beginning of the year 2021, a new initiative of privatization in the power sector emerged in the form of the draft Electricity (Amendment) Bill 2021. As soon as the draft of the bill came out, 1.5 million electricity workers of the country expressed their strong protest by nationwide work boycott and protest on 3rd February. As a result of year-long mass awareness and protests, the Electricity (Amendment) Bill 2021 could not be placed in the Parliament, but 2022 is coming up with a new challenge.
Power Employees & Engineers of Uttarakhand broke the silence by resorting to total strike in July 2021. Again in October 2021 Uttarakhand Power Employees strike notice forced CM Uttarakhand to directly intervene and hold talks with Joint Action Committee. MP Power Employees & Engineers also exhibited show of unity and solidarity by resorting to successful strike.SEA MSEB also served strike notice and got success. Hats off to Chandigarh UT & Puducherry UT Power Employees for resorting to strike time and again against privatization.
The privatization process in the Union Territories of Chandigarh and Dadra Nagar Haveli, Daman and Diu has been completed and can be handed over to the private houses at any time. The proposal of merger of 33 KV power substation in the Union Territory of Jammu and Kashmir with J&K Transmission Corporation Limited and formation of Joint Venture Company with PGCIL was thwarted by JK Power Employees. The way the power workers & engineers of Jammu and Kashmir roared against the process of privatization from the backdoor to form a joint venture with Power Grid Corporation of India Ltd is highly commendable. The result of a successful strike from the midnight of 17-18 October was that after 96 hours of strike, the administration of the Union Territory of Jammu and Kashmir - in a way, the Central Government had to back down and the proposal of joint venture had to be stopped. At the end of year 2020 UP Power Employees gave the message by thwarting privatization proposal of Poorvanchal Vidyut Vitaran Nigam Varanasi, likewise the electricity workers of Jammu and Kashmir gave a wonderful message of struggle and success to the electricity workers of the whole country as the year 2021 was passing. Revolutionary greetings to the electricity workers & engineers of Jammu and Kashmir.
In the year 2021, in an effort to maintain electricity supply amid the second deadly wave of Covid-19, thousands of electricity employees & engineers across the country have sacrificed their lives which can never be forgotten. Humble tribute to all the power employees & engineers who are no more with us today.
Let us take a bird's eye view of some of the special developments that took place in 2021.
ELECTRICITY (AMENDMENT) BILL 2021 – DELICENCING OF DISTRIBUTION WILL PAVE PATH FOR PRIVATIZATION OF PROFIT MAKING AREAS
The All India Power Engineers Federation considers electricity as an essential service and not as a commodity. Further, in the context of urbanisation and the internet electricity has become a fundamental right since all other services are dependent on electricity. This should be the basis for all decision making in respect of electricity. In 2003, the legislation changed and in its wake the entire structure of the industry was changed.
Eighteen years of experience with the legislation, the Institutions, and governance mechanisms needs to be examined thoroughly and based on that necessary changes need to be made. Experiments of privatization in Odisha, Urban Distribution Franchisee in Nagpur, Aurangabad, Malegaon, Gaya, Bhagalpur, Samastipur, Agra, Ujjain, Gwalior, Sagar & other places has miserably failed and needs review of policy before going for any other legislative change. This is extremely important since India is not a homogenous nation. It is a federal country with vast differences, the socio-economic capacity and therefore the ability to pay the cost to serve varies drastically, the stage of development and investment made in industry also vary.
Unfortunately, instead of using this opportunity to review and rework, legislative changes are being made on a piece-meal basis. Since there was strong opposition to the Electricity (Amendment) Bill 2020, the Electricity Act 2003 is being modified in a moth-eaten fashion and presented as Electricity (Amendment) Bill 2021. Such adhoc measures are dangerous, since electricity is a complex, inter-connected network system and making amendments to suit certain interests may cause more damage than good.
The purpose of the amendments is to facilitate multiple players into the distribution sector, reducing DISCOMS to merely one of the players at par with a person or even an artificial judicial person, complete freedom to create franchisees with no public accountability, artificial distinction between urban and rural when there can be no barriers in the flow of electricity, ensure uncritical continuity of policy by enforcing the policy by restricting the selection of Chairman of the CERC to bureaucrats from the Power Ministry with little or no expertise in the power sector,create a de-facto Contract enforcement authority by not only providing the commission to adjudicate in contracts but also give it powers of a civil court & additional responsibility to load dispatch centres of ensuring payment schedules when load management is a continuous process.
What the Electricity (Amendment) Bill 2021 fails to address is the inability of a majority of people, including farmers to pay the cost to serve, the experience of several franchisees being by the regulators due to fraud, the cost of metering inhibits retail (domestic) competition, making it unviable. Due to open-access there is already competition for the larger consumers, failure of existing private distribution in modernising the network, estimate the cost of metering and the alternate use of capital investment for the improvement of the distribution network in order to reduce the technical losses.
Worst will be cherry picking by Private Distribution Companies as they will not have universal power supply obligation. Using the network of Govt DISCOMS Private Companies will be minting money by supplying power in only profit making areas mostly to commercial and industrial consumers which will financially destroy the Govt DISCOMS.
Since electricity is a concurrent subject under the Constitution of India, the exercise to amend Electricity Act 2003 by excluding significant stake holders from states, viz consumers and electricity workers and engineers would run contrary to the Constitution itself.
PRIVATIZATION IN UNION TERRITORIES
The entire bidding exercise as carried out by Chandigarh UT Administration does not fit in the framework of section 63 since neither of the respondents i.e. Govt. of India or UT Administration have not been able to show the approved guidelines of Govt. of India the legal basis for bidding gets demolished.
Since UT Administration has clearly stated that it has selected the successful bidder in conformity with Standard Bidding Documents issued by Central Govt, and since the GOI approved SBDs have still not been issued by GoI it follows that the entire process is illegal and unapproved by GoI , and deserved to be totally scrapped. In absence of GOI approved/notified SBDs the entire exercise of privatizing all UTs electricity distribution becomes illegal and deserves to be scrapped.
In Chandigarh, consumer forum and Resident Welfare Associations came in large numbers to oppose the Electricity (Amendment) Bill 2021 because losses in Chandigarh are in single digits—around 9%. Moreover, Chandigarh electricity is cheaper than Haryana and Punjab. Private sector company of Goenka, Kolkata Electricity Supply Company, is selling electricity at some of the highest costs in Kolkata. In Chandigarh, the Power Ministry has decided to give Chandigarh electricity to the same Kolkata Electricity Supply Company. This is a game for profit of Corporates.
Similar is case of privatization of Dadra Nagar Haveli Daman & Diu which is to be handed over to Torrent Power. This should also be scrapped. Puducherry Govt is also moving ahead for privatization and confrontation is inevitable in coming days.
PROPOSAL OF MINISTRY OF POWER TO MERGE 33 KV SYSTEM IN STU & FORMING JVC WITH PGCIL
Ministry of Power GOI has issued circular to all States advising merger of 33 KV System in State Transmission Utility and further formation of Joint Venture Company of STU with PGCIL. This is based on report of a committee headed by CMD PGCIL.The proceedings and report of the Committee do not include key stakeholders such as State Discoms, State Governments and State Regulators. The recommendations/ conclusions of the Ministry of Power Committee are therefore not acceptable to AIPEF. Intervention / Interference of the Ministry of Power of the Central Government on issues internal to State Discom is not agreed to. As per National Electricity Policy the issue of loss reduction is to be addressed at the State level under the guidance of SERC/ Commission. Approaches of the Ministry of Power to dictate policy matters on issues internal to Discom working are against the federal structure / Constitutional provision of concurrent subjects and the approach of the Ministry of Power must be to give the autonomy to the State Discoms for solving their issues such as losses. Section 131 of Electricity Act 2003 confers autonomy to State Govt to decide on structure of new companies after unbundling and this choice has already been exercised. Issue of loss reduction is a critically important subject already being addressed by the SERC/ State Regulatory Commissions as per Electricity Act 2003 and as per National Electricity Policy of 2005.
REVIEW OF POWER PURCHASE AGREEMENTS
There are several cases wherein States / Discoms entered into 25 years PPAs with IPPs on the basis of exaggerated energy demand projections, while on actual operation the stations were backed down with consequence of paying capacity charges without drawal of energy. Some states such as Punjab, Madhya Pradesh are experiencing this problem in extreme.
The issue of high cost PPA is becoming more widespread and serious. Thermal projects for which PPA is signed while the State is already in surplus- as in the case of MP and Punjab. Due to this the full power from stations would be for only 1 or 2 months of the year while for balance 10 or 11 months there would be backing down and payment of capacity charges for energy not drawn. This problem is most acute in Madhya Pradesh and Punjab. In case of Solar PPAs which were signed several years ago at the prevailing rate of 10 or 15 ? / Unit while now the rates have reduced to around ?. 3 per unit. Some policy framework is required to deal with those instances where Discom locked into high cost PPA for upto 25 years.
Coal Crisis and Black Marketeering by IPP’s during Crisis
The coal crisis in October 2021 was a manufactured crisis. India is the second largest coal producer in the world. The coal crisis resulted in a power crisis. Electricity was sold at Rs. 20–21 per unit on the energy exchange. This was done by the same people who were responsible for the crisis. In Mundra, Gujarat, there are two 4000 MW power plants of Tata and Adani. Both are located in a coastal area, and both are based on imported coal. They did aggressive bidding for imported coal and they were required to pay for the coal for 25 years with adjustment of fuel cost. Both closed their plants in crisis period saying the price of imported coal has gone up. When Gujarat and Punjab said they will buy electricity even at higher rates, they ran their plants at 1400 MW. These are the people who sold their electricity at Rs. 20 per unit in market. They could have used coal from Indonesia and Australia as they used to for keeping the plants running.
AIPEF wrote a letter to the Power Minister and told him to blacklist these companies. We are trying to explain this to common people.
PRIVATIZATION
Electricity privatisation is directly related to farmers’ struggle. My salutations to them. This is like a second struggle for independence. Their demands include the repeal of Electricity Bill. They have understood the consequences of Electricity (Amendment) Bill 2021. Farmers need power to pump water from tube wells. What will be the consequence if farmer has to pay the cost to serve.Today, the average cost of electricity is about Rs. 7.50 per unit. As minimum 16% increase is allowed to private companies, it will then cost Rs. 9 per unit. So on an average Rs. 80,000 to 90000 will be the annual bill of the small farmer having 7.5 hp tube well.
Common peoples think that privatisation is good. This is misleading. In Delhi electricity is free up to 200 units. For 200–400 units there is half rate or discount. But private electricity companies get the full rate and the subsidy is given by the Government which is tax payers’ money. In Mumbai, Rs. 12–14 per unit is the rate for domestic consumer. Both Tata and Adani are operating in particular areas of Mumbai; Adani charges Rs. 12.20 and Tata charges Rs. 12.15. The Government is simply fooling the public by saying that privatisation will bring competition and reduce the tariff.How this can be done when costly PPA's of 25 years will continue as it is. These private companies will simply use existing Government network/ infrastructure and mint money.
Electricity infrastructure has been built by spending lakhs of crore rupees of people’s money. And Central Govt wants to give this to private companies who can use it without spending a paisa. They want to delicense electricity distribution. People are required to have a license even for driving a two-wheeler. But no license required for electricity distribution. People can simply register and they will be eligible to supply electricity. First, the Generation of electricity was delicensed, result is that now more than 34,000 MW generation is lying idle due to high cost of fuel and other reasons. This is public money that is being wasted not capitalists’ money.
The privatisation of the public sector and monetisation of assets are not good for India and disinvestment in public enterprises over the years has led to the concentration of economic power, says a report “Privatisation: An Affront to the Indian Constitution” by Peoples’ Commission on Public Sector and Public Service headed by Thomas Isaac, former finance minister, Kerala, and EAS Sarma, former Power Secretary, Govt of India. The Union Government led by the National Democratic Alliance (NDA) is committed to an aggressive push towards privatisation of national assets having a bare minimal presence in strategic sectors. It has decided to relinquish control or shut down its companies in all other sectors of the economy. This agenda of privatising the public sector and alienating public assets could cause certain irreversible and severe damages to the nation’s polity and economy. M.G. Devasahayam in his preface mentions that dismantling public sector and monetizing public assets means subjugating our national economic interests, our economic independence and sovereignty to the interests of international finance capital and corporate entities.
CHALLENGES AHEAD IN 2022
The year of 2021 was a year of struggle. Not only was there a struggle with Covid-19, under the guise of the epidemic, but the way the Central Government is bent on selling the public sector to a few selected private houses, the struggle continued. Struggle for the survival of the life and also for the protection of the property of the nation. In the name of National Monetization Pipeline, an open announcement has been made to lease basic sectors like Railways, BSNL, Petroleum, Electricity, Banks, Insurance, Ordnance Factory to selected private houses. Today the biggest national religion is to prevent the sale of national assets.
In order to stop the already failed experiment of privatization in the Power Sector, it is necessary to stop the Electricity (Amendment) Bill 2021, it is necessary to stop the merger of 33 KV Power Substation with State Transmission Utility and formation of JVC with Power Grid Corporation and in the field of Generation, more and more Power Generation in the State Government Sector should be established.
In the year 2022, we will move forward with this determination, we have to take this steely resolution.
Save PSU Power Sector – Save INDIA
Inquilab Zindabad
Shailendra Dubey
Chairman