ELECTRICITY (AMENDMENT) BILL 2020 - 1.5 MILLION POWER EMPLOYEES & ENGINEERS OBSERVED BLACK DAY ON JUNE 01 BY HOLDING MASSIVE DEMONSTRATIONS & WEARING BLACK BADGES ACROSS THE COUNTRY
AIPEF in coordination with NCCOEEE noted with grave concern that the Government of India proposed Electricity (Amendment) Bill, 2020 towards privatization of the sector through transferring the asset created with public exchequer to private corporate houses amidst COVID - 19 Pandemic. AIPEF vehemently criticizes the approach of the government ventilated through the proposed draconian anti-people electricity legislation with the clear object of privatising the profits & nationalising the losses. It is evident that when the whole country is integrally fighting the menace of COVID-19, the Ministry of Power is otherwise busy in fulfilling agenda of privatization.
To lodge strong protest NCCOEEE decided to make a wider campaign among people of different walks of life to unveil the counterfeit behind the policy of the Government and misleading statements submitted in the paragraphs under Objects and Reasons circulated with the notification of the Bill. As a part of this campaign National Protest Day was observed on 1st June, 2020. Looking Lockdown conditions prevailing across the country it was historical with grand success.
Salutations to all Power Engineers & Employees across the country for a massive & grand show of very strong Unity & Solidarity. Electricity fraternity have written and created a glorious chapter of history on June 01,2020 the magnitude of which was beyond our expectations. Lacs of Power Engineers & Employees in every State exhibited their strong commitment. Right from Kashmir to Kanyakumari and Kutch to Kamaroop Hills it was a great exhibition of Unity & Solidarity. J&K demonstration wrote a new chapter by breaking silence in the valley under difficult circumstances, really great. Ladakh and remote areas of North East exhibited a grand show. Massive demonstrations in Gujarat home state of PM itself speaks a lot. June 01, 2020 in fact is a day that has unfurled altogether a new orientation in the annals of power engineers & power employees powerful spectrum of North - South – East - West geography.
Hats off to all Power Engineers & Employees for a historic show.
AIPEF STRONGLY OBJECTS TIMING & POLICY BOTH
All India Engineers Federation (AIPEF) places on record its deep anguish at the cavalier manner in which the Government of India is pushing far reaching legislative amendments to the existing laws relating to the electrical power industry. The Electricity (Amendment) Bill, 2020 that has been circulated does not stop at reorganising the industry but also seeks to rewrite the roles and responsibilities of the Government of India and the Governments of the States as specified in the Constitution of India.
For more than a year now, the Government of India, has been using not only its superior financial muscle as well as that of the central public sector undertakings to intimidate and browbeat the State Government. Through the media, the Government of India has unilaterally declared that the power sector of Union Territories would be privatised, even those Union Territories that have a legislature elected by the people.
It is unfortunate that such ruthless pushing through far reaching changes in law is being done at a time when the country is completely traumatized by the deadly pandemic COVID-19.Therefore, for obvious reasons, it is not possible to provide collective understanding. Even more serious, is the attempt to privatise the electrical supply industry and DISCOMS at a time when they are under enormous financial strain, on account of lack of demand consequential to lockdown for more than 100 days. Even common sense would suggest that valuable assets are not sold through garage sale. Such a complete lack of concern for the assets, built by a generation of power employees and engineers, using peoples taxes is indeed shocking and completely unacceptable.
All India Power Engineers Federation (AIPEF) has obtained feedback that a large number of States have raised serious objections that the amendments are against the spirit of federal structure of the power sector based on constitutional provision of power being a concurrent subject. The amendments seek to erode the working of Regulatory Commissions and dictate on issues of tariff, DBT, subsidy, Electricity Tribunal ECEA, Payment security issues etc which are clearly in purview of State policy.
Under such circumstances it is required that the highly controversial Electricity (Amendment) Bill 2020 must be withdrawn, particularly as a substantial number of States have already expressed their strong objections. These would certainly require extended discussion and debate in both houses of Parliament which would not be possible under constraints of virtual participation. It makes it all the more necessary and urgent that the Bill must be referred to the Standing Committee on energy so that States and Stakeholders including consumer organisations and Employee /Engineers Associations/ Federations can submit their objections in detail. It is stressed that when the Electricity Act 2003 was first discussed and debated at length with participation of all Stakeholders before enactment, then the proposed Amendments to Electricity Act 2003 surely deserve to be similarly discussed and debated, which has not been ensured up to now.
AIPEF submits that the issues contained in draft amendments are far too draconian to be rushed through and certainly deserve the detailed feedback from the States who hold a concurrent Status under the Constitution. Several of the issues are clearly a tilt towards privatization, which need to be removed. While the Electricity Act 2003 was based on Electricity Bill 2001 which was finalised after extensive discussions with all States and stakeholders, the present amendments have been summarily proposed without any discussion with States. The Amendments are further based on the agenda of privatisation which is not justified for a key infrastructure such as electricity.
In view of the fact that a large number of States have strongly objected to the draft amendments and pointed out the conflict with the Constitution, we suggest that the Electricity (Amendment) Bill 2020 should be withdrawn. In case the Union government wants some changes in Electricity Act 2003, these must be extensively discussed first with States, Stakeholders including Consumers & employees/engineers so that their concerns are adequately incorporated. This would be in the spirit of democratic functioning within the Constitutional framework of a Federal structure.
OBJECTIONS RAISED BY STATE GOVERNMENTS ARE VERY SERIOUS
As per press reports the Chief Ministers of Kerala, West Bengal,Telangana, Tamilnadu,Chhattisgarh,Jharkhand,Puducherry, have issued letter of objections addressed to the Prime Minister. Energy Minister of Maharashtra, Bihar,AP have also raised serious objections through their letter. The summary of salient points is as under
· Inhuman attempt to destroy the Country’s Federal Structure
· Completely unjustified in view of Covid-19 Crisis
· States not consulted despite being concurrent subject
· Adverse impact on consumers by way of increased tariff
· Against consumers, public, farmers, unorganised sector
· Subsidies and cross subsidy should be retained
· Centrally determined tariff policy can be tweaked at will
· Appointment of SERC members by Centre not acceptable
· ECEA (Electricity Tribunal) not acceptable
· Powers of States would be snatched by Centre
AIPEF is of the view that State Chief Ministers objections may be taken seriously and in view of overwhelming objections by States the draft amendments as contained in Electricity (Amendment ) Bill 2020 must be dropped.
SALIENTS POINTS TO OPPOSE ELECTRICITY (AMENDMENT) BILL 2020
STATEMENT OF OBJECTS AND REASONS:
The Statement of Objects and Reasons is an open attempt for introducing privatization of the electricity sector of the country by giving multiple benefits and concessions to private sector parties, corporates, IPPs etc. at the cost of State Discoms. The major steps towards privatization are :
Setting up of Electricity Tribunal (Electricity Contracts Enforcement Authority - ECEA) for ensuring payment security mechanism as a pre-condition for scheduling and dispatch of electricity; proposals for Distribution Sub-Licence and Franchise; etc.
Even though, there was no mention in the Statement of Objects and Reasons regarding privatization of electricity system of Union Territories, the Govt. of India has bye-passed its own procedure entirely and issued direct instructions to all the UTs of the country for starting / taking steps to privatise the electricity system of UTs. This major policy decision to privatise UTs was not included at all in the MOP proposals of 17-Apr-2020 or in the Statement of Objects and Reasons which speaks about the intentions of GOI.
DISTRIBUTION SUB-LICENCE AND FRANCHISE:
This is an open attempt by the Govt. of India to introduce privatization of the Distribution System through the back door of distribution Sub-Licence or Franchise. This procedure has acute risk of cherry picking of profitable areas by the private sector Sub-Licensee or Franchisee by which the revenues of the State Discoms will sharply reduce and cause financial distress to become even more acute and unmanageable. Presently the State Discoms meet the priority requirements of consumers such as agriculture with the help of cross subsidy from high revenue consumers such as industrial etc. If the high revenue consumers are taken away by the process of cherry picking, the finances of State Discoms are liable to collapse. The Central Government before putting such proposals should compile the list of Sub-Licensee and Franchisee proposals that have miserably failed in the past, such as the franchisee of profitable areas at Nagpur, Aurangabad, Agra, Jalgaon,Gaya,Muzaffarpur,Bhagalpur,Ujjain,Gwalior,Sagar etc.
ESTABLISHMENT OF ELECTRICITY TRIBUNAL, ECEA:
This proposal is a drastic measure to create another judicial authority by which high cost PPAs can be enforced on Discoms, so as to give huge profits to IPPs and generators. Instead of tackling the problem of high cost PPAs (Solar, wind etc.), the Govt. of India proposal is for enforcing such high cost PPAs and putting huge financial stress on the State Discoms.
UNIFORM SELECTION COMMITTEE FOR SERC, CERC, APTEL ETC.:
The proposal is an attempt by the Ministry of Power to dominate SERCs by having appointees selected by Central Government and planted in the State SERCs. This is a violation of the concurrent nature of electricity. The role of State Governments in the constitution of SERCs must not be eliminated as proposed. The track record of Govt. of India itself in selection/ appointments to statutory bodies itself is very poor and in the case of Central Electricity Authority, there are only three full time members against 8 vacancies. Against 6 part time members, there are nil appointments at present.
NATIONAL RENEWABLE ENERGY POLICY:
Govt. of India has already set a high target of 175 GW (Giga watts) renewable power capacity target of the country to be achieved by 2022. This target has further been steeply increased to 450 GW by 2030. Govt. of India proposal to have renewable power purchase obligation will result in States being forced to purchase renewable power as per enhanced targets with the result that the State thermal generating stations would have to be massively backed down / shut down or dismantled.
The present PLF of thermal stations which is about 50% only would further steeply reduce. The Govt. of India paper on renewable energy purchase obligations has not examined this aspect at all and Govt. of India has not studied the impact of hugely increased renewable energy targets on the operation and shutting down of existing thermal power stations in the state sector. Govt. of India must therefore review and amend the proposal concerning renewable power policy and bring up a revised comprehensive proposal where the impact on existing thermal stations should be studied in detail and projected along with the RPO proposal.
PAYMENT SECURITY MECHANISM:
The proposal is openly pro-private sector and in favour of IPPs / corporates private sector projects. The proposal is that the RLDC under section 28 of the Electricity Act 2003 should schedule/ dispatch only that power which has got payment security mechanism in favour of the generator. This is incorrect, unacceptable and totally rejected.
COST REFLECTIVE TARIFF, TARIFF STRUCTURE AND CROSS-SUBSIDY:
This provision is an attempt to dominate and dictate by the Govt. of India to the Regulatory Commissions, CERCs or SERCs regarding the tariff structure and thereby encroaching upon the jurisdiction of the Regulatory Commissions. The existing statute, Electricity Act 2003 is already based on the fundamental principle that Government must be distanced from tariff determination since tariff determination is the purview of Regulatory Commissions.
With this direction for removal of subsidy / cross subsidy, the cost of power in rural areas will steeply shoot up and have a damaging impact upon use of electricity for maximizing agricultural production.
SUBSIDY:
Govt. of India has proposed this amendment to section 65 of the Electricity Act 2003 which is extremely harmful and damaging to the farmers. By this amendment, the Discom will recover the cost of electricity from the farmer and in case Government wants to subsidize this power, the Government should give direct benefit transfer (DBT) to the farmer. This DBT scheme is totally impracticable since the majority of state Governments are already facing acute financial distress and are unable to pay the required subsidy to the State Discoms under the existing section 65 of the Electricity Act 2003. Therefore, when the State Governments are not in a position to make the subsidy payments to the State Discoms, how the State Governments can be expected to give the DBT of subsidy to the lakhs of agricultural consumers. It will put the farmers to acute financial distress since the farmers will have to pay the electricity bill to the Discom while the DBT payment may be delayed to any extent for months together.
PENALTIES AND RPO – HPO:
The proposal for penalties in implementation of RPO-HPO is a one sided attempt to ensure that the high targets of renewable energy are off taken by the State Governments. It is observed that when the Central Government set the high target of 450 GW to be achieved by 2030, the Central Government did not discuss the same with the State Discoms of the country who are ultimately having to purchase and utilize this renewable energy. While on one hand, the Central Government did not get the consultation or concurrence of the State Discoms for purchasing and utilizing the high target of 450 GW, the Central Government is now prescribing stringent penalties to penalize the Discoms who do not meet the renewable purchase obligations. It was necessary and desirable that at the time of setting the target of 450 GW, the proposal should have been discussed in detail and decided with the concurrence of the State Discoms who are the ultimate purchasers/ utilizers of renewable energy.
There is also a very urgent need to ensure that the renewable power contracts finalized by the Central Government in respect of renewable power are at competitive rates which are with the consultation / concurrence of the State Discoms. Already there is a serious problem where in past years, some high cost PPAs were finalized/ signed for renewable energy but which are now being refused / rejected by the present Discoms on account of high rates being unaffordable. The Govt. of India must take adequate and complete precautions that the competitive rates at which the renewable PPAs are finalized must be kept in the knowledge and concurrence of the State Discoms to avoid any problem in future. However the approach of the Govt. of India is totally in the other direction that State Discoms must be forced to purchase the renewable energy irrespective of the rates finalized through the mechanism of RPO-HPO. The Govt. of India must amend its approach so that the consultation and concurrence of the State Discoms is ensured at the time of finalizing the PPAs, instead of the present approach for putting a penalty for shortfall of RPO obligations.
FARMERS & POOR CONSUMERS WILL BE THE MOST SUFFERER
As per the policy Central Govt is going to abolish subsidy and cross subsidy in supply of electricity which means a very costly electricity for common consumers. Citing the example cost of electricity is average Rs 06.73 per unit and as per companies act after privatisation private company is liable to take minimum 16 % profit, adding which cost of electricity will not be less than Rs 08 per unit. Since Central Govt has decided to do away with subsidy and Govt says that everyone will have to pay cost of electricity which means common domestic consumers and even farmers will have to pay minimum Rs 08 to Rs 10 per unit.
To understand take the case of farmers consuming 9000 Unit per year will have to pay Rs 6000 to Rs 8000 per month and domestic consumers may be asked to pay Rs 8000 to Rs 10000 per month. Thus Central Govt is misleading by saying that electricity will be cheaper. Subsidy is being removed to pave the path for private houses & facilitate private distribution companies so that they may not incur any loss. Similarly prepaid meters are also to be installed to facilitate private franchisees.
A TIME TO SHOW UNITY & STRENGTH
Now Union Power Minister R K Singh has made it very clear that Ellectricity (Amendment) Bill 2020 will be tabled in coming monsoon session of Parliament which is likely to be held in July 2020. With this announcement we have to move fast and prepare ourselves to fight the design of Central Government with all our might. Our strategy is to educate and mobilise all power sector employees & engineers first along with mass mobilisation and education of farmers and other domestic consumers so that they are also awakened to join the movement with us and it becomes a National Mass Movement. Side by side memorandum is to be given to all MP's, MLA's & public representatives so that they all are well versed to oppose the draconian Bill in Parliament.
Power Sector is in Peril !
Defend it with all your might !!
#SAVEPOWERSECTORINDIA
Jay Hind
Shailendra Dubey
Chairman