No. 03 - 2020 / FOCUS 18 - 01- 2020
FOCUS
CONGRATULATIONS & SALUTATIONS TO ALL - 08 JANUARY 2020 WORK BOYCOTT A GRAND SUCCESS A HISTORICAL DAY
AIPEF congratulates and salutes all power engineers & employees across the country whose united stand made 08 January 2020 Work Boycott a grand historical success. We resorted to one day Work Boycott basically against proposed amendments in Electricity Act 2003 to segregate carriage and content with the aim to introduce multiple supply licenses/franchise and other main demands as following -
-Withdraw all proposed amendments in Electricity Act for privatisation, Stop Privatisation/Franchise & Integrate all unbundled power utilities in form of SEB Ltd like KSEB Ltd & HPSEB Ltd.
-Implement Old Pension Scheme for all Power Engineers & Employees recruited after unbundling of SEB's.
-Regularise all contractual employees working in Power Sector.
We successfully resorted to one day work boycott and proved our solidarity. We succeeded in creating mass awakening on other issues eg integration of all power utilities, old pension scheme and regularisation of contract workers. It’s great to witness enormous support and enthusiastic participation in Work Boycott in many states. Your active support will definitely gives us confidence and encouragement to move ahead in our struggle to protect the Power sector from evil forces.
CENTRAL GOVERNMENT MOVE TO INTRODUCE PRIVATE/FRANCHISE IN ELECTRICITY SUPPLY & DISTRIBUTION NETWORK
Central Government has planned a new bailout scheme " ADITYA "in the next budget aimed to privatize state-run power distribution companies (Discoms) with multiple supply franchisees for power distribution in an area and a network franchisee. Discoms would be eligible for funding from Power Finance Corporation against project milestones only if all the conditions have been met.
Unable to introduce amendments to Electricity Act, 2003 due to stiff opposition from power employees & engineers across the country & opposition from majority of the States, the Centre has decided to push through it's agenda in coming Budget Session of Parliament through an administrative order. Tactics will be old of arm twisting of States either go for Privatisation / Franchise or loose Central assistance. Power Ministry has drawn up a draft model plan for states that will allow multiple private franchisees to operate as power suppliers in a distribution area, with state-run distribution utilities becoming just owners of the network.
The plan is akin to the earlier proposal of the Power Ministry that suggested separation of the content (electricity supply business) and carriage (distribution network) business of distribution entities, thereby making discoms aggregators of power and owners of the distribution network and allowing multiple suppliers in their area.
The government intended to do the changes through an amendment to Electricity Act 2003 but the changes have failed to get Parliamentary approval for last five years. The present plan would allow multiple franchise to operate in distribution circle without any amendment to the Act.
It is worthwhile to mention that the franchisee model has been tried in states like Maharashtra,Bihar,Madhya Pradesh,Odisha and Rajasthan, but has miserably failed and has not yielded any result. Instead of reviewing the failure of Franchise experiment now Govt wants to introduce multiple franchisee in one area creating the mesh which common consumer will have to bear.
The franchisee would earn their revenue from the payment made by the consumers for electricity use without spending a single penny in distribution network which will be constructed & maintained by DISCOMS by spending Crores of Rupees.
To the advantage of new operators, it has been decided that the subsidy that needs to be paid any category of consumers would be done directly into their bank account under the direct benefit transfer scheme. This would mean that franchisees could recover full electricity tariff.
Existing distribution companies will retain control of wire business, that means the distribution system remains with them and they will get the wheeling charges only. So Discoms will retain distribution system and make available power in wholesale to the supply licensee who will have the responsibility for giving supply to different consumers and servicing those consumers. Supply will be unbundled from distribution, carriage.
Home minister Amit Shah will head a group of ministers to discuss the proposed National Tariff Policy that is being awaited as a major reform by the stressed power sector but being opposed by power employees & engineers and many state governments. The inter-ministerial group will have 10 ministers, including eight in cabinet rank and two with independent charge, people familiar with the development said.
Central Govt has referred National Tariff Policy aimed at to major Electricity Reforms including segregation of carriage & content leading to multiple private supply licensees to Group of Ministers headed by Home Minister Amit Shah. This GoM includes 08 Cabinet Ministers & two State Ministers with Independent Charge. It includes Heavyweight VVIP's like Defence Minister Rajnath Singh, Road & Transport Minister Nitin Gadkari,Finance Minister Nirmala Sitaraman, Coal & Mine Minister Prahlad Joshi & others. It is a Mini Cabinet in other words. Report of this Mini Cabinet headed by Amit Shah is likely to come during Budget Session. After going through the names one can very well understand that now the matter is in very advance & decisive stage and a very serious concern for all of us working in Power Sector.
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.
Presentations already made in Power Ministers conference held on 09th January 2020. Some of the States have started working on it for privatisation / franchisee of electricity supply. Bihar has asked the authorities to prepare DPR within one month for multiple franchisee in supply. Other States may also be working on same lines. In Bihar power employees & engineers are highly agitated and preparing for massive show down.
AIPEF APPEAL TO CENTRAL & STATE GOVT's
In above context AIPEF wants to draw the attention of Central Govt & all Chief Ministers as following ---
1. That Electricity is a no longer just a vital infrastructure, but a fundamental right of the people.
2. 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.
3. 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.
4. Induction of large scale renewable energy solar power plants are being done without concern for economics of transmission and Grid stability.
5. The PPAs entered into in the past need to be renegotiated for the survival of the electrical power supply industry.
6. Implications of imported coal tariff being a pass through has serious consequences and must be address.
7. Systematic dilution of the role and responsibilities of the State Goevrnment.
8. 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
9. 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.
10. 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.
ODISHA PRIVATISATION AGAIN
AIPEF strongly opposes the re-privatisation of CESU and handing over control to M/s TATA Power Ltd. Our objections are mainly because of the followings:-
1) The earlier privatisation of Odisha Distribution Sector has brought disastrous effect and completely shaken the sector. But instead of learning from the mistakes and taking remedial actions, Govt. silently allowed OERC to re-privatise CESU and process of privatisation for other DISCOMS are under way.
2) During earlier privatisation, there was a condition that private companies will infuse funds for infrastructure development, reduce technical and commercial losses and improve operational efficiency to provide quality power to consumer. Nothing of that sort happened. AES left CESU within a year creating huge liability and after 15 years of misrule OERC cancelled the license of Reliance Energy for NESCO, WESCO and SOUTHCO on ground of inefficiency & total failure.
3) After failure of privatisation, CESU has been managed by OERC for last 18 yrs. Most of the time senior IAS, IFS, IPS officers, ex-members of OERC remained as CEOs. The performance deteriorated but nobody has been made accountable. The CEOs never took any fruitful step to improve performances primarily for one or other reason. Since CESU was to be privatised again, they didn’t feel the urgency to improve the performance of CESU.
4) During privatisation era huge liability has been created so much so that around Rs 10,000 crores are payable by DISCOM to GRIDCO (a Govt. undertaking ). But both AES and Reliance Energy went scot free and the arrear has now become state’s liability. Nobody is aware as to what safe guard has been made in the present contract with TATA Power so that similar situation will not recur otherwise M/s TATA Power Ltd. may also create liability of thousand crores and run away.
5) In the past 3 years both Govt. of India and Odisha have invested around Rs 2000 cores under various schemes for infrastructure development in CESU. Few notable schemes are DDGJY (Rs 300 cores), IPDS (RS 300 cores), ODSSP (Rs 750 cores), and Saubhagya Infrastructure (Rs 150 cores). That apart, funds have also been invested for feeder separation under ODFF, infrastructure development under Biju Grama Jyoti Yojana, Elephant corridor. After FONI cyclone new infrastructure was also built in CESU area by investment of around Rs 400 cores. Thus it is surprising that how MS TATA Power has been allowed to buy 51% share by meagre sum of Rs 175 cores. This raises huge question mark on the basis of evaluation of assets.
6) Now that present CEO of CESU has under taken a massive drive of collection of arrear dues to the tune of Rs 1900 cores. It is a big question mark of how the money will be shared. Is the arrear taken into consideration while evaluating the assets of CESU or not put a big question mark too.
7) CESU has given 14 divisions to different franchisees since 2012. The franchisees have also been given mandate to reduce AT&C loss, 100% metering, invest in infrastructure. Instead of doing this they have also created liability for CESU. But instead of penalising those, their normal dues are being paid regularly.
8) There is a huge question mark about the pension, PF, gratuity and leave salary funds. There is no transparency in the actual fund requirement and fund availability. So not only employee’s present but future is also at stake.
9) The employees hold 10 percent share in CESU and are important stake holder. But they have never been consulted in this process.
10) When no other state in INDIA except Odisha and Delhi (predominantly Urban) has privatised electricity distribution, when both privatisation and franchise system in Odisha has shown disastrous result and in fact created huge liability to the state, it is not understood at whose interest re-privatisation of CESU has been rushed through and re-privatisation of other three DISCOMs are also in pipe line.
We urge the state Chief Minister to immediately withdraw the LOI issued to M/s TATA Power limited and order for a thorough probe to the issues raised as above.AIPEF is fully committed to actively support Odisha struggle. Privatisation move is not acceptable. Unite & fight against it is call of the hour.
AIPEF demands an independent evaluation of the performance of the privatized power utilities across the country, “their impact on the consumers in terms of the cost burden and customer service, and the financial burden caused by them to the banks.
The revival of the power sector is central to the development of the country, but the lopsided reforms carried out by the Government of India during the last
two decades have failed to accelerate the development.
Coming time is full of struggle .Be prepare to fight it out at every level. It is Now or Never.
Jay Hind !!
Shailendra Dubey
Chairman