REPRESENTATION TO STANDING COMMITTEE ON ENERGY
NATIONAL CO-ORDINATION COMMITTEE OF
ELECTRICITY EMPLOYEES & ENGINEERS
6,
TALKATORA ROAD, NEW DELHI - 110 001.
Tel: 3753149 , E- mail info@eefi.org
Fax: 3753149
P.K. Bhandari
Director
Standing Committee on Energy
Lok Sabha
Secretariat
New Delhi.
E-mail: energycom@sansad.nic.in
Date: October 27, 2001
Sub: Representation against the Electricity Bill - 2001 and chance of
personal hearing.
Sir,
Every society evolves legislation through an evolutionary process accommodating
new concepts and technologies in order to ensure the optimal use of resources
consistent with societal needs. Legislation is resorted to only if and when
necessary. The proposed legislation is without a perspective.
It is true that the Indian Electricity Act 1910 and the Electricity (Supply) Act
1948 do not fully cover the needs for accelerated developments and generation of
funds, adequate for funding new projects. It was, therefore, thought the
proposed Bill would cover restructuring of electricity sector and streamline
procedure and enabling clauses to usher-in a climate for fresh investments.
Instead of addressing these problems, GOI insists on IMF-WB-WTO sponsored
Electricity Bill 2001 to facilitate privatisation repealing Indian Electricity
Act 1910 and Electricity (Supply) Act 1948, thereby denying efficient service to
consumers at economical just rates.
In the last decade enough attempts were made in the name of "reforms" to address
the problems, but they are IMF-WB dictated solution, which have been proved
inappropriate resulted in increased Power Sector crisis.
The Electricity is a subject under the concurrent list, as per the Constitution
of India. Moreover, State Governments/Union Territories are answerable to the
people of their states for consistent quality power supply at an affordable
price. But the Electricity Bill -2001 had diluted the power of the State
governments in all respect as depicted in the following areas:
" Planning process of State Power Sector.
" Area supplier/Licensing process
etc.
" Regional Transmission Centre/State Transmission Centre.
" Power
supply to rural areas.
" Regional Load dispatch centre.
The Indian Economy, especially agriculture depends heavily on electrical power.
It is indeed sad that a fundamental change not only in legislation, but in
institutions supporting the same is sought to be brought about in a caveller
manner without any serious cause, deliberation or discussion. It can be summed
up and concluded that -
" The new legislation is not required. The existing
legislation is broad based and can accommodate any restructuring.
" The
reforms so far undertaken have been failed miserably on every count.
" The
Electricity Bill -2001 is diversionary and will result in confusion causing a
further set back of the power programme.
" There will be enormous problems
and litigation in respect of transfer of assets liabilities and accountability
etc.
The government intends to promote development of a power market
including trading with an administered price through regulator and its
consequential benefits if any would remain illusionary.
Therefore the
Electricity Bill - 2001 should be withdrawn instead the twin problems of
financial structure of SEBs and the unbridled electricity theft mostly by
organised industry be tackled with firm political will by the Central and the
State Governments.
SMALL BRIEF OF REFORMS IN POWER SECTOR
India had undergone a
transformation starting with the structural loan conditionalities of the world
Bank, which required that the power sector should be opened up. The Government
of India has been responding to these developments with a succession of
measures. The first step taken in 1991 was introduction of policy measures to
enable establishment of power plants in the private sector, followed by steps to
reorganize the ESI, specially the SEBs and introduce regulatory mechanisms at
the Central as well as the state levels. Unbundling of the vertically integrated
systems and privatisation were considered as highly desirable forms and are
being pursued vigorously at different levels with the objective of resource
mobilization and to contain fiscal deficits.
The restructuring of the entire electricity sector in Orrisa with O.E.R Act 1995
has created today paralysis in the stated objectives. On one hand the world bank
has stopped loan after dispersing 650 crores in June 2001 against sanctioned
loan of Rs. 2500 crores due to failure to comply with the World Bank
conditionalities where as electricity supply to more than hundred villages could
not be restored till now dislocated due to supercyclone in year 1999 besides U.S
power major AES imposed black-outs/brown-outs in third week of May 2001 in CESCO
by stopping power generation from its units in Ib Valley. To make situation
worse AES refused to pay July salaries and thereafter to 8500 employees in CESCO
citing a financial crunch, finally, deserted CESCO and regulator had to appoint
an administrator to manage CESCO. Power cost went high to 3 times the existed
rate with in 5 years.
Bombay high courts refusal to go in merits of DPC (Enron)-MSEB PPA seeking
refuge behind a technicality of doctrine of resjudicata in petition of CITU and
subsequent assertion by Ministry of Power (GOI) that its opposition to the
policy will play havoc with the power situation in the country had to-day led to
a stalemate where there is no buyer for Enron Power. The slogan advanced by the
then Energy Minister N.K.P Salve that "Costly power is better than no power" has
been transformed into the slogan "No power is better than costly power" by our
P.M when he replied to a press-reporter's query recently on this issue during
his treatment in Bombay that " who can buy this costly power"?. U.S Federal
Energy Regulatory Commission has issued a statement that no IPP from U.S is
going to enter Indian Power Sector in coming years in case if Enron and AES
pull-out from India. Kenneth Lay chairman of ENRON is pressurizing the GOI by
reminding that U.S laws have in built provision to enact sanctions against India
if it failed to pay one billion dollars of its assets at DPC (ENRON). The
DPC-MSEB PPA has now estranged into legal battles involving all concerned
without a solution in sight.
A PPA in 1995 by Karnataka to buy all power from cogentrix, a guaranteed
purchase order of Rs. 75,000 crores over a span of 30 years from a company whose
total equity was 45 lakhs when questioned through a writ-petition where
Karnataka High court ordered for a C.B.I enquiry forced cogentrix to pull out
but supreme court was induced to overturn the High Court verdict.
The greater Noida experience is also quite the same. The UP electricity board
privatize the greater Noida power distribution system which was taken over by
the Noida power company. The U.P electricity board charged them 1.40 paise per
unit approximately 50% of the prevailing rate, they charged 2 rupees to the
consumers and collected dues accordingly. While the company failed to make
payments to the electricity board and the outstanding today is more than 150
crores.
The year 1998-99 witnessed several path-braking events in the Indian Power
Industry. Firstly setting up CERC responsible, inter alia, regulating
electricity generation tariff of CPSU's. Secondly the transmission sector was
thrown open to the initiatives of private enterprises. Finally GOI came out with
a mega power project policy clearly departing from trend of promoting
small-sized short gestation naphtha based power projects. Privatisation of
electricity distribution in cities/towns with a population of half million or
more, a requirement to avail power from mega power projects and share from
unallocated share quota of Central pool of central generation.
Recently in a major shift from the earlier trend, new distribution models are
being evolved as well. It is no longer necessary to just unbundle. Linking aid
to Power Sector Reforms, the centre is pressurizing the states in the name of
accelerated power development programme. The centre is now offering errant
states a bunch of solutions to choose from along with some financial carrots to
make the package attractive - forcing 17 states into an MoU with GOI for Power
Sector Reforms. The news is the states seem serious this time round. The bad
news is, intent is not enough to turn SEBs around.
The increase in the liability of electricity boards was due to the increase in
the power rates by the central utilities and private power operators. The cause
for this hike was also attributable to the reform policies like the raising of
depreciation rates and the increase in investment returns besides the escalation
of the fuel costs. However the bail out program is based on the privatisation on
the power sector. This again will lead to increase in power rates. It is
interesting to note that the India's power rates was almost lowest in the world
during 1991 Rs1.09 and by 2000 it went up to Rs 3.04 which is above the world
standard which means our competitive efficiency is dwindling .
Unmindful of this the govt of India is taking steps to make a comprehensive
legal frame work to privatizing the power sector for which the electricity bill
2001 is introduced in Lok Sabha on 29th August 2001. The proposed Bill will
adversely effect service conditions of the Employees. They will become
probationer after contemplated transfer scheme under the Electricity bill - 2001
comes into force. The crux of the objectives as stated in the bill is quoted
below:
" With the policy of encouraging private sector participation in generation
transmission and distribution and the objective of distancing the regulatory
responsibilities from the Government to the Regulatory Commission……..Accordingly
it became necessary to enact a new legislation for regulating the electricity
supply industry in the country which would replace the existing laws, preserve
its core features other than those relating to the mandatory existence of the
State Electricity Board and the responsibilities of the State Government and the
State Electricity Board with respect to regulating licensees. There is also need
to provide for newer concept like power trading and open access………".
The above shows that the govt. of India is out to privatize the whole power
industry by transferring the enormous public wealth created in the Indian power
sector is sought to be given to the private companies Indian and foreign for
nominal costs. The privatization will only increase the power rates to
unaffordable levels since the private capitalists are only interested to make
maximum profit. If this vital infrastructure facility is taken over by the
profit hunters the peoples interest of power at affordable rates will be the
first causality and above all the nations competitive efficiency will seriously
be weakened.
THE INTERNATIONAL EXPERIENCE:
The international experience too shows
beyond doubt that the private operators domination in the power sector is
dangerous. California (USA) which has come in to focus during January this year
gives a graphic lesson. Without elaborating I shall give some excerpts from the
speech made by The California Governer Grey Devis on 8th January 2000.
"……..But we must face reality California's deregulation scheme is a colossal and
dangerous failure . It has not lowered consumer prices it has not increased
supply. In fact, it has resulted in skyrocketing prices, price gouging and an
unreliable supply of electricity. In short, an energy nightmare.''
"The out-of-state generators who bought most of our utility's power plants are
now charging California several hundred percent more for wholesale electricity
than we paid just one year ago."
"Worst of all, there's evidence that some generators maybe withholding
electricity from the California grid to create artificial scarcity, which in
turn, drives up the price astronomically.
My friends, electricity is not an exotic commodity like pork bellies, to be
traded in the chaotic equivalent of a future market; electricity is a basic
necessity of life. It is the very fuel that powers our high tech economy".
After this the Govt of California has taken many measures to impose cap on whole
sale our rates and taken steps to take over private power utilities and steps to
govt control over the power industry. Now this is spreading to other states too.
It has become a big debating point in the Unites States.
A secure supply of electricity at an affordable price is not only social
benefit; it is a vital element in economic development. 69% households in rural
India presently deprived of electricity will dream for it and it will be
difficult to liberate them from backwardness to bring in the main stream of the
nation. In India agriculture sector depends heavily on Electricity. Economic
aspirations of consumers (lower prices) and suppliers (high profits) cannot be
balanced unless power is produced on least-cost route. The bottom line is that
we cannot attack poverty, improve food security and build economic opportunity
without more energy. Energy alone will change life more than anything else. The
reforms so far undertaken have been failed miserably on every count. Reality
does not confirm with the rosy picture painted and privatisation is no answer
and therefore the proposed Bill - 2001 is not necessary.
Enclosure: Annexure 1,2,3 & 4
(CHAKAR DHAR P.SINGH) (A.B. BARDHAN) ( B.S. MEEL) (E. BALANANDAN)
All India
Electricity Employees' Federation Electricity Employees' Federation of India
(S.N.DESPANDE) (AKHTAR HUSSAIN) (SHAILENDRA DUBEY) (K.C.NAIKWADI )
Akhil
Bharatiya Vidyut Mazdoor Sangh All India power Engineers Federation
( H.N. MISHRA) (K. ASHOK RAO) (GIRISH PANDEY)
All India Diploma Power
National Working Group Hind Mazdoor
Engineers Federation on Power Sector
Kishan Panchayat
