DISSENT NOTE-ON ELECTRICITY BILL –2003 by  Parliamentay Standing committee on Energy,  Mr. Basudeb Acharia

Every society evolves legislation through an evolutionary process accommodating new concepts and technologies in order to use of resource consistent with societal needs. Legislation is resorted to only if and when necessary. The proposed legislation is without a perspective. Several questions need to be answered:

 ·                     What would be the long-term policy with respect to privatization of the electrical power industry?

·                     Would profit maximization be sole objective in a country where a vast majority has little purchasing capacity?

 ·                     Since independent power producers (and traders) are allowed to sell power directly to select consumers, what would happen to the people of the state where the plant is located since no part of India is, in the near future, going to have surplus energy except may be for a few hours or days?

 ·                     Why should SEBs be liquidated and handed over to the private sector (on worst financial terms possible)? Would the SEBs not be profitable if provisions of the bill (and for that matter even under the existing  legislation) in respect of revenue realization and subsidies are enforced?

 ·                     Can the removal of subsidies and profits guaranteed to the MNCs not result in the denial of power to rural areas and the urban disadvantaged? Who will take care of power and food riots that will follow?

 ·                     Would the people be given a choice between affordable power with power cuts during peak hours and high priced uninterrupted and reliable power?

 ·                     In an interconnected grid how would the administrative boundaries of rural and urban be drawn on electrical power lines and why should rural areas be served on the “do it yourself basis?

 ·                     And, finally if the state Govts. Could, with impunity, violate the existing legislation particularly Section 59 of the Indian Electricity (Supply) Act, 1948, what purpose does the new legislation serve?

 ·                     It is true that Indian Electricity Act 1910 (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 streamlining procedure and enabling clauses to usher-in climate for fresh investments. Instead of addressing these problems, GOI insists on IMF-WB-WTO sponsored Electricity bill 2003 to facilitate privatization repeating 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 Govts. / Union Territories are answerable to the people of their States for consistent quality power supply at an affordable price. But the Electricity Bill-2003 had diluted the power of State Govt.s in all respect a 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 role of the legislature is almost eliminated; it is reduced to a listening post. The appellant commission eliminates the jurisdiction of civil courts. The CEA is reduced to a data collection center and for laying down standards for construction and operation. There is no holistic examination of the viability  of the various generation and transmission schemes. The investors is free to decide on the future of this very vital infrastructure that is distinct from any other commodity or service in as much as that it has no finished goods inventory.

 The question arises as who has felt the need? Moreover in what way have the existing legislation failed, which have added above one lakh MW since independence and provided electrification in 5 lakh villages (out of total 5.9 lakh) besides energizing b125 lakh pump sets. It is highlighted that all the existing Acts have never been implement in true spirit, what is the guarantee that the proposed bill will not be violated?

 In fact the Bill is based on the California type model which has failed miserably leading to soaring prices, rolling blackouts, laying off thousands of workers. Let down with such failures, the Governor of California, Gray Davis in his Jan, 8, 2003 address said “my friends electricity is not a exotic commodities like pork bellies, to be treated in the chaotic equivalent of a future market, electricity is a basic necessary of life. It is the very fuel that powers our high-tech economy” What lesson can we learn from California crises?

It is proposed to statutorily divide India into two parts  viz. “Urban India” and Rural India for planning, Policy and execution of the electricity supply. The rural area (perhaps a loss making system) is proposed to be managed through NGOs Panchayat, Franchise etc. and urban area ( a profit making) through ultra modern private agencies. As a result the supply of Rural areas would be retailed / governed by “area lords” or mafias in utter violation of laws and safety consideration. This would enforce costlier as well as unreliable power to farmers / rural agro industries endangering energy security and in turn, food security. This would virtually result into no common and poor man.

To have proper check and balance in the formulation  of above policy and to avoid the arbitrary decision making on policy formulation, it is strongly felt that policy should be drafted by CEA in consultation with sates and  their after be approved and notified by the central Govt.

The thermal generation has been completely freed from any permission / approval except a general coordination of general compliance relating to the grid connectivity. Even publication of notices for formation / representation of the concerned and local people  has been waived off which was provided under section 29(2) and 29(3) of ES, Act, 1948. It is a serious issue and implies that an investor will enjoy complete freedom to invest in generation for any size, fuel, location type, technology,  capital cost etc. and without considering the national economy, optimal use of national resources, foreign exchange implications etc.

It means the country in one stroke will give up all control in fuel energy balance, which have far reaching implications on National economy. Such statutory freedom from technical environmental and social responsibility is very dangerous for the country keeping in view the fact that the national has paid a heavy price for enron misadventure  in Maharashtra for which all checks and balance including TEC by CEA were kept aside.

It is irony that one hand the govt. is reiterating its commitment to make chief, affordable and reliable power to all section of the consumer and on the other, it is doing away or diluting those checks and balances which ensure optimal utilization of natural recourses to arrive at least cost energy for the ultimate  benefit of common consumers.

TEA by CEA has been wrongly compared with licensing, the tech-economic appraisal / clearance (TEA) by CEA is neither an administrative approval nor any licensing but this is a process of optimization of project parameters for maximization of overall benefits from the projects, which has direct bearing over tariff.

In case of hydro generation this is like a half free and half catch situation.

To ensure complete transparency and to allow representation, the provisions of section 29(2) and 29(3) of Electricity (Supply) Act, 1948 need to be retained.

The emphasis of the Bill is to provide  electricity in urban areas and no responsibility has been cast to have an assess of electricity in rural areas especially when all the villages are top be electrified by 2007 and 80,000 villages which cannot be connected to grid are to be electrified by 2012, taking into consideration   with all the state governments  are reeling under financial crunch, financial resources are to be appropriated in a fixed share so that both Union Govt. AND state Govts. may make substantial investment in the electrification of rural India.

The move by the Committee to di-license the transmission and distributor of electricity will invite private sector’s participation whose track record so far has been dismal. The nation has achieved tremendous programme under Govt. control and there is no reason why this sector should be handed over to MNCs. This will  further add to unemployment in the country.

It has been proposed that the cross subsidization will have to be eliminated, this will have adverse impact, in a country where a thirty per cent of population  is living below poverty line the cross subsidization should continue.

In the third World countries the World Bank together with the multinationals and other private interests are compelling the local Govts. to open the power sector. And in order to ensure that administrative decisions take by the Govt. of the day are not overturned by their successors (as should or could happen in a democratic framework) it is essential for the vested interest to ensure that the legislation itself is changed, thereby giving the “reforms” stability through an irreversible process. It is this and this alone that is the real motivation behind the Electricity Bill 2003. What is put out for public consumption is that the existing legislation is far too cumbersome and needs consolidation, and that efficiency can only be imparted to the industry by legislative changes.

The modal that is envisaged for India in the Electricity Bill 2003 has failed even in California and USA. Simply because the powers that be chosen to ignore all the evidence placed before them and plough on with a particular ideology that benefits clearly unidentifiable vested interest, the people cannot be silent spectators in an area that effects their life.

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 cavellar manner without any serious cause, deliberation or discussion. It can be summed and concluded that;

·                     The new legislation is not required. The existing legislation is broad based and can accommodate any restructuring.

·                     The reforms so far taken have been failed miserably on every count.

             The Electricity Bill 2003 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 Govt. 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 2003 should be withdrawn instead the twin problems of financial structure of SEBs and the unbridled electricity theft mostly by organized industry be tackled with farm political will by the Central and State Governments.

Sd/-