Opinion: Free power, don’t arm-twist States

The proposed Electricity Bill is one of many such whips with which the Modi government wants to control the democratically elected State governments.

By Dr Ranjith Reddy

It appears that the Union government is hell-bent to undo what Thomas Edison dreamt of. Edison wanted to make electricity so cheap that only the rich burn candles. But, the move of the Modi government appears to undo the noble objective that the inventor of incandescent electric light has for mankind.

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Even though we are a Union of States, the federal structure is the heart and soul of the Indian Union. The Union being given a larger share of the cake in the form of Union List and Concurrent List does not mean that it can bulldoze States. This is not cooperative federalism, the leitmotif of Prime Minister Narendra Modi; rather, it is a Machiavellian attitude.

Many Infirmities

The proposed Electricity Bill is one of many such whips with which the Modi government wants to control the democratically elected State governments. States would be willing to go along with Union if the proposal benefits the poor and farmers. But, it is not; and, it is precisely the reason why every single State, including the BJP-ruled ones, albeit behind the curtain, is opposing the Bill lock, stock, and barrel.

There are many infirmities in the Bill, such as:
• It paves the way for fixing meters to agriculture pumpsets
• It restricts giving free or subsidised power to farmers, poor and downtrodden
• It permits private players to supply power by using transmission network of government-owned discoms
• There is no universal power supply obligation on private distribution companies. It has to be done only by government-owned discoms
• Modi government is putting a condition that only if meters are fixed, States would be allowed to get 0.5% additional resources under FRBM
• 20 lakh employees working in the government power sector would lose their jobs if this Bill becomes an Act

Let us look at how the above will impact farmers, marginalised sections and the poor.

Piecemeal

The Power Minister says the amendments to the Electricity Act, 2003, are not piecemeal but comprehensive. But, in reality, it is piecemeal. Let me give an example of how the Modi government is manoeuvring and selectively amending the parent Act. The Centre issued a directive – the Telangana CM too mentioned this in a discussion recently in the Assembly – saying that meters should be fixed to agriculture pumpsets.

It says that no connection shall be given without a meter and such meter shall be a smart pre-payment meter. It means, without fixing a prepaid smart meter, no power connection should be given. And, the argument of the BJP leader in the Assembly that there is no such move by the Modi government is nothing but tweaking the facts, and his theory is far from the truth.

Telangana and many other States are giving free power to farmers to reduce the latter’s burden from huge input costs. Is it wrong? Through the Bill, the BJP government maliciously wants to fix meters and collect electricity charges from farmers and the poor! Is it not wrong? Despite repeated appeals, the Sileru hydropower project was given to AP in 2014!

Not just in Telangana, the farming community in many States are protesting. For example, in Srikakulam and UP, farmers burnt prepaid meters opposing the proposal. Cleverly, such a major change was brought through the backdoor – under the Electricity (Rights of Consumers) Rules, 2020, fearing a backlash from farmers and the poor.

Secondly, as per the latest figures of April-June, 2022, released by the Centre, India’s GDP is Rs 65 lakh crore. I ask: A country with Rs 65 lakh crore of GDP cannot show magnanimity in giving just Rs 1.2 lakh crore to farmers in the form of subsidies or free power? Being an agrarian country, can anyone justify denying this to farmers and the poor?

Thirdly, it is not that we have no power or there is less production of power. As per the Central Electricity Authority, the country’s installed capacity is 4,04,178 Mw. These are of two types – base load ie, firm power (uninterrupted) and variable power. Base load is 2,42,890 Mw and the highest peak load stood at 2,10,793 Mw in June, 2022. This is the maximum that the country has used in a day so far since Independence. It is less than the base load. So, we have an excess of 1.6 lakh Mw. When we have no issues on the fiscal and generation side, why is the Modi government arm-twisting States like Telangana which are truly following to achieve the goal of a Welfare State?

National Electricity Policy

There was a proposal to formulate a new National Electricity Policy in place of the outdated existing one and, for this purpose a Committee was constituted long ago. But, so far the committee has not submitted its report. Instead of waiting for the recommendations and finalising a new National Electricity Policy, why is the Central government in a hurry to pass this Bill? Is it to hand over the country’s power sector to sahukars? What kind of ‘nation’s interest’ is this?

The Bill (Clause 5) allows private players, who may be cherry-picked, to supply power, by using the existing network of discoms, and shockingly the State Electricity Regulatory Commission does not have any say either in fixing charges or area of supply.

These private players use the discoms’ network, established by spending lakhs of crores and spending thousands of crores on maintenance, and compete with the very same state-owned discoms! Secondly, there is every possibility that private licensees would prefer distribution of power to urban and industrial areas, leaving poor, rural and farmers to state-owned discoms.

In fact, there is a provision in the Bill which says that government companies will have universal power supply obligation, meaning only state-run discoms will provide power to all categories of consumers, and not private players! We have seen how private players in the telecom sector have shunned remote, hilly, tribal and inaccessible areas and it is the BSNL which is forced to go there. We know where the BSNL is now and where private players are sitting. Thirdly, this kind of experiment is underway in Mumbai where the domestic power tariff ranges between Rs 12 and 14 per unit which is the highest in the country! So, if we let this Bill pass, the same may happen to discoms.

Fourthly, the claim of the GoI that consumer is given a choice of power supply is a complete hoax. In fact, this Bill does not give any choice to consumers but to private players who can supply power as per their choice.

The Centre linking additional borrowing of just 0.5% of GSDP under FRBM to fixing meters to agriculture pumpset is bizarre. When it comes to borrowings by States, Article 293(1) states that the States are entitled to extend a guarantee to State PSUs within such limits as may be fixed by the State Legislature. But, shockingly, now, the Finance Ministry is treating the above borrowings as off-budget borrowings citing a CAG report. This is the first time that the GoI is treating off-budget borrowings as government borrowings, that too retrospectively! I ask: Is the Constitution supreme or the CAG report?

The country has to wake up and employees in the government power sector should wake up too, because, if this becomes an Act, there is a possibility that over 20 lakh employees working in Transcos, discoms and other related areas would lose their jobs.

Green Energy

The Prime Minister announced Panchamrit at Glasgow with 5 Nectar Elements – all relating to pushing green energy. No doubt, there are issues of public finances for energy transition, leveraging private sector finances, etc, but, despite all these, it is welcome, since the objective of COP26 is for a better future.

There are a couple of provisions (23 & 29) in the Electricity Bill which speak about renewable energy obligation and, again, it will be fixed not by the State Electricity Regulatory Commission (SERC) but by the Centre! The Bill makes non-compliance with renewable energy obligations a punishable offence. The point is: One should admit that the potential for renewable energy varies from State to State and SERC’s fix percentage of renewable energy mix depends upon production. The GoI is imposing uniform renewable power purchase obligation for all States! How does ‘one-size-fits-all’ work? If Telangana follows this, the renewable power purchase obligation goes up from 8.5% to 21% of the total consumption which leads to burdening consumers and bringing down production of TSGenco plants!

Coal Blending

The other important aspect is mandatory blending of 10% imported coal with domestic coal. India has more than 350 billion tonnes and Telangana has nearly 9,000 million tonnes of proven coal reserves. Is it prudent to mine our coal reserves which are cheaper, or, to go in for mandatory coal imports? If one adds 10% imported coal to domestic coal, the cost of power goes up by 60-70 paise per unit! Who will pay – PM Modi or Union Power Minister?

Hence, there should be a holistic approach to the entire issue with informed debate and consultations with the States. We have seen how the farm laws ignited massive protests across the country. It was because they were enacted without consultation with the States, undermining federalism, giving no thought to the welfare of marginal farmers. Ultimately, the Prime Minister had to roll back the laws.

Similarly, the whimsical proposal to amend the Electricity Act, 2003, is nothing but muscling States and relegating them to a subaltern position.

Under the pretext of ‘national importance’, the Union is usurping the powers of the States, one by one! It has become ‘rampant’ during the last few years. This is a very dangerous trend and if it is not stopped, the federal structure would be fumbled, tumbled and crumbled which is not good for the world’s largest democracy.

The seeds of growth and development have to be sown in the States. The Centre has to help the States in putting water and manure to grow these seeds and make them become growth engines of India. This kind of joint effort is the beauty of cooperative federalism which strengthens the federal structure. So, all the Centre should do now is to take the States, stakeholders and experts on board, discuss the Bill threadbare before taking it up for second or third reading in Parliament.