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Draft power bill promotes privatisation, 'impedes' social, environmental safeguards

Counterview Desk

In an appeal to the chairperson, Rajiv Ranjan Singh, Parliamentary Standing Committee on Energy, and its members, 90 civil society group have sought cancellation of the draft Electricity (Amendment) Bill 2020, proposed by the Union Ministry of Power in April. I am sharing for your reference, regretting that all that it does is to “promote privatization of the power sector. 
Claiming that, if passed, it will “further widen the prevailing disparity in accessing electricity between cities and rural areas, and further between high-income areas and poorer regions”, the appeal states, the bill “promotes profit over public interest and makes no effort whatsoever to protect the rights of consumers, project impacted communities, natural resources and nature.”

Text:

We the undersigned are writing to you to express our serious concerns and draw your attention to the draft Electricity (Amendment) Bill 2020 proposed by the Union Ministry of Power issued online on its website vide letter dated April 17, 2020 (No. 42/6/2011-R&R (Vol-VIII)) requiring the wide public to comment within a period of 21 days, i.e. by May 8, 2020.
Due to widespread protests about attempting to amend a major law of the country when the entire nation was under lockdown, and almost all fundamental freedoms were unavailable, even suspended, we note this deadline to the comment was extended to June 5, 2020 vide letter of the Ministry dated April 27, 2020 vide (No. 42/6/2011-R&R [Vol-VIII]).
At the outset, we consider the advancement of this proposal to amend a major law that has a direct impact on economic, social, and ecological securities of the people of India, during the lockdown, as fundamentally opposed to basic tenets of democracy.
As per Constitutional demands, lawmaking, or amending existing laws, must only be undertaken when every element of democratic decision making in the country is fully functional and the Parliament is able to perform its competent and oversight role on behalf of the people at large.
It must also be in conformance with the principles of prior and informed consent, the principle of intergenerational equity, the principle of public trust doctrine, the principle of sustainable development, and some of the international agreements that India is a signatory to in the context of law-making and bringing in amendments.
This was not possible during lockdown when most fundamental freedoms, especially the freedom to associate and express one’s views and disagreements, enshrined in Article 19 of the Constitution of India, were unavailable to the public at large and also to elected representatives.
As a result, initiating the public commenting period on such comprehensive reform of a major law during lockdown comes across as extremely unconstitutional and therefore constitutes the direct attack on fundamental rights of citizens, and opposed to the very purpose of the main law – which is to advance the public interest.
The Bill aggressively promotes privatization of the power sector which will further widen the prevailing disparity in accessing electricity between cities and rural areas, and further between high-income areas and poorer regions.
Private Multinational AES and domestic private company BSES of Reliance Energy Ltd, both miserably failed in Odisha. Franchise experiences of many cities in India were not great due to non-performance.
Lakhs of people are forced to live without electricity. But the bill proposed to abolish the cross-subsidy that farmers and the poor benefit. And it is imposing on the states to bear the subsidy burden irrespective of the bad financial health. It is imposing DBT in which the productivity of farmers’ crops might be left upon the fate of DBT or rain-fed irrigation only.
The draft bill has strongly advocated bringing huge FDI, PPT model, etc. in the sector. However, the government unnoticed increasing tariff, the highest NPA in the sector, debt-ridden discom companies.
All these facts indicate the failure of privatization in the sector. In addition, it has also proposed to establish an ultra-judicial body named “Electricity Contract Enforcement Authority” to ensure the coercive realization of fixed charge from the DISCOMs even without consuming a single kWh of energy. Electricity will be virtually removed from the concurrent list of the constitution and overlooking the role of the state, advocate for centralization, and commercialization of the sector.
Looking at the following facts nationwide protest were held by power sector employees unions, social media, and virtual protests were also shown by civil society groups and members. Subsequently, 11 states and two UTs have also opposed this bill in power ministers’ conference on July 3, 2020.
As a result union power minister had committed to placing a modified draft of the Electricity (Amendment) Bill 2020. But even after more than 50 days, the Centre is yet to place the amended draft in the public domain.
Although we have submitted our representation of the draft bill to the ministry for reconsideration in a given time duration, there is a crucial need of deeply engaging with the people through nationwide public consultations because the implications of this amendment will affect the lives and livelihoods of people across the country.
You, being representative of the people and a member of the parliament of the standing committee on energy, can play a significant role to ensure the continuance of the right to access electricity by the people in the country. In the enclosed statement we have explained in detail how it will widen the prevailing disparity in accessing electricity and the impacts experienced by local communities from the privatization in the sector.
Draft bill will widen prevailing disparity in accessing power between cities and rural areas, between high income and poorer regions
We, civil society groups and members, collectively demand that the Parliamentary Standing committee on energy should immediately look into the draft bill from a people’s perspective instead of commercialization of the sector.
The Ministry should place a modified draft based on a needs assessment of the challenges in access to electricity by local communities across the country of the electricity (Amendment) Bill 2020 in the public domain. The committee must also ensure the modified draft is shared in various regional official languages of India and ensure there will be public consultations across the country.
Your willingness to take action now will demonstrate your support for a just and democratic process of amending the law and will be a vital step towards protecting the constitutional provisions and India’s commitment to all the international agreements.

Comments

  1. The 2003 version of the Electricity act was brought in to promote the corporatization of the power sector and make it market-friendly. However, due to widespread and tireless efforts of trade unions, environmental and social movements, various social and environmental safeguards were introduced into all aspects of electricity generation. The proposed amendment attacks the very foundation of these safeguards and promotes a law that is unabashedly investor and industry-friendly promotes profit over public interest and makes no effort whatsoever to protect the rights of consumers, project impacted communities, natural resources and nature.
  2. The proposed amendment organizes electricity generation, transmission and distribution in an extremely centralized manner, and neutralizes, even does away with, powers of various State and District level institutional mechanisms that currently guarantee decentralization of the electricity sector, especially with the proposal of establishing an Electricity Contract Enforcement Authority (ECEA). This ECEA also takes away powers now latent to State Electricity Regulatory Commission. Such changes are opposed to the Constitution as electricity generation is in the Concurrent list and ought to involve States fundamentally in its planning, generation and distribution.
  3. The proposed amendment promotes uniform tariff across states against the very grain of appropriate public planning of electricity. As a consequence, districts and states which suffer an immense loss due to the diversion of natural resources to power generation, and do not benefit from the generated power, will pay the same tariff as those who consume the power without suffering any loss.
  4. The proposed amendment takes away almost all of the rights to litigate against infirmities and illegalities that are now available in the State Electricity Regulatory Commissions, High Court, Consumer Courts, and Central Electricity Authority and Appellate bodies. Such powers have been delegated to ECEA which is under the direct jurisdiction of the Power Ministry and thus is not an independent or autonomous forum. That such a review mechanism is proposed for one of the most critical aspects of the governance of this country is not merely shocking, but scandalous.
  5. All this suggests that the ECEA is being brought into effect with the single purpose of protecting the interest of the licensee and to promote the licensee’s interest, and is a mechanism for promoting ease of business at the cost of public interest, and also of future generations. 
  6. It is widely known that most of the power purchase agreements under the current law have failed to advance public interest and yet the licensees enjoy due to the benefits of gaining even without delivering per contractual obligations – be it in power generation or transmission. The current proposal energizes such failure franchise agreements. This will also now worsen the situation in rural areas where no private franchisee invests on the claim they are not profitable ventures and thus can create a stark binary of lit-up cities and darken villages.
  7. The Bill aggressively promotes privatization of the power sector which will further widen the prevailing disparity in accessing electricity between cities and rural areas, and further between high-income areas and poorer regions.
  8. The Bill is intended at promoting environmentally disastrous big hydro projects as renewable, which they are not, and thus environmentally safe, which again they are not as is evident across the world.
  9. There is a clear design to take away a variety of subsidies that are necessary to reach electricity to the masses. Lakhs of people without access to electricity, their condition will only worsen as a result of this Bill which makes consumers pay higher rates, thus making electricity a luxury commodity. 
  10. Section 37 of the proposed bill read with Section 176 of the principal act enforces a standard payment security mechanism across states. Due to this, the decision making powers of the state utilities will be compromised and they will be forced to make advance payments to Independent Power Producers (IPP). Stressed State utilities will be forced to pay for this surplus power, even when it is not generated, shifting, thereby, public revenue to private profit. Distressed Discoms will collapse under such obligations.
  11. As per Sections 39 and 42 of the proposed bill read with S 181 of the principal Act, the proposal is to remove the right of SERCs to frame regulations and withdraws the role of SERC in specifying surcharges and associated modalities. Due to this, the State will again risk financial losses as they will not be able to negotiate or frame any regulation regarding tariffs. As far as Power purchase agreements are concerned between the state and power generating companies, the central interference in the process would be harmful to the State, and against the federal character of governance. The Act will thus take away all available rights of the state to define its own future. In summary, it will take away the power of states in the management of generation, transmission, and distribution of electricity
  12. Section 39 of the proposed bill read with Section 181 of the principal act removes the key role of SERC regarding contracts and PPA, while the rest of it is related to tariff disputes and other consumer grievances. Consequently, it will deepen the financial crisis of state DISCOMs.
  13. Further, the bill proposes that the cost of failure in payment of tariff shifts to the DISCOMs which in turn will pass it on to consumers. The power producer is secured.
  14. Section 3 of the proposed bill read with Section 2 (15) (a) of the principal act proposes cross border trade of electricity obviating the due role of CERC which is required to issue regulations.
  15. Section 18 of the proposed bill read with S65 of the principal act proposes that those who cannot pay would be reimbursed through direct cash transfer (DBT) to the bank accounts of the consumers. It would be far simpler if people who cannot pay, are not required to pay at all.
  16. Section 18 of the proposed bill r/w Section 65 of the principal act mandates subsidy released in advance by the respective state governments through a mechanism similar or otherwise to directly to consumers and removes any directions of future assurance or deferment of subsidy to be considered in the tariff setting. It is eliminating the cross-subsidies, and it is assumed that somehow this burden will shift to the pockets of the states’ which already do not have sufficient funds. Such centralizing of power over the power is also shifting the cost to the states.
  17. Section 18 of the proposed bill r/w Section 65 of the principal act addresses issues of subsidies and cross-subsidies which are under the purview of SERC. It is now proposed to transfer this power to the central authority and with a directive to impose a uniform tariff for all discoms of the country. There is no clarity on the issue of state-specific subsidies and another mechanism in the bill. Therefore, it seems that the bill is not brought because the government is keen to protect people's interests, but the primary focus of this bill is to protect the Independent Power Producer.
  18. Section 19 of the proposed bill r/w section number 77 of the principal Act to remove the requirement of consultation with Chief Justice for the appointment of a legal member or chairman. This results in the entire power sector escaping judicial scrutiny and become the preserve of executive decision making.
  19. Proposed changes in Section number 126, 135, and 164 of the principal Act are all oriented towards adopting the failed so-called Private-Public-Partnership model, which is a euphemism for privatizing profits and shifting the burden of losses on to the public. This approach will result in the privatization of DISCOMS in the name of promoting franchises in the distribution sector.
  20. Section 37 of the proposed bill r/w subsection (2) of 176 of the principal act proposes to add the word hydro as renewable. It mandates the minimum percentage of purchase of electricity from renewable and hydro sources of energy under section 3A. In effect, it dangerously promotes hydro as renewable, which it is not, and seeks to promote it as environmentally friendly, which certainly it is not.
  21. Section 4 of the proposed bill read with Section 3 of the principal act brings a separate National Renewable Energy Policy. While promoting renewable energy is welcome, it should not be a plank to allow monopolization of land without conforming to the provisions of the land acquisition act in promoting large solar park development, resulting in widespread displacement and dislocation of communities and capture of common lands.
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