The last nail in the coffin of DISCOMs


By Shri Dipak Kumar Saha, Joint Convener, Coordination Committee of Electricity Employees Engineers & Pensioners, Assam, Bijulee Bhawan, Paltanbazar, Guwahati-34

(Article first published in The Assam Tribune, Guwahati on 1 November 2023 and is reproduced with the permission of the author.)


In the name of reforms and restructuring of power sector under the framework of the neo-liberal agenda of successive governments, India’s power sector has been facing a terrible onslaught for the last three decades. The Electricity Act-2003 was enacted to pave the way for privatisation in the power sector, distancing the role of the government from the electricity business. State Electricity Boards were unbundled and their generation, transmission & distribution arms, which are complementary to each other for synchronizing the power system, were separated.

The generation sector was opened for domestic and foreign private companies and now more than 50 percent of power generation is under the control of private Independent Power producers (IPP), who have been ensured a minimum guarantee of 16 percent profit, resulting in an unprecedented hike in power tariff.

On the other hand, in spite of various challenges, the lion’s share of the distribution sector is still with the States’ Discoms. But the Central Government is trying to privatise discoms by amending the Electricity Act-2003. The main objective of this is to split the power distribution area to allow supply of power by private companies through parallel licenses in profitable areas for cherry picking and at the same time forcing Discoms to participate in the competition with private companies by letting the use of their own networks by paying wheeling charge only. But, the Discoms have to bear all the cost of maintenance of network and have to compensate private company in case of any faults!

At the same time, the regulatory commission is plotting to make the mechanism of electricity tariff determination completely based on market-driven forces.

The second wave of reform programme has been undertaken at the direction of the World Bank since 2013 and the Government of India (GoI) has been trying to amend the Electricity Act-2003. Electricity (Amendment) Bill-2014 and Electricity (Amendment) Bill-2018 were introduced in the Parliament, but due to the strong protest by electricity consumers and employees they could not be passed. Even during the Covid-19 Pandemic, the Ministry of Power (MoP) had tried to introduce the Electricity Amendment Bill-2020 which faced strong opposition from electricity employees, consumers as well as farmers. Even some State Governments also raised objections.

But, while presenting the budget for 2021-22, the Finance Minister introduced the Electricity Amendment Bill-2021 very tactfully. The MoP did not serve any notice for comments of the stakeholders but referred the Bill to the state governments and discoms for seeking their comments. The MoP conducted video conferences with state governments & Discoms and webinar with corporate houses and tried to place the Electricity Amendment Bill-202l in the Parliament but failed.

The GOI while withdrawing three farm laws, had assured that the Electricity Amendment Bill-2021 would not be placed in the parliament without discussion with all the stakeholders. But going back on its commitment, the Power Minister tabled the Electricity Amendment Bill-2022 on August 8,2022. The Lok Sabha Speaker, without giving any scope for discussion to the opposition MPs, referred the bill to the Parliamentary Standing Committee of Power. The Standing Committee collected comments of the stakeholders concerned and held several meetings with various ministries and departments, though no discussions have been held so far with major stakeholders – electricity consumers, employees and farmers.

The GoI may at any time ask the Standing Committee to send the report and without any discussion with the major stakeholders, the Committee may recommend the Bill and send it to the Parliament. Again, the Parliament may approve the Bill on the strength of maximum numbers of MPs of the ruling party and even may endorse it for enactment as a law.

The GoI, however, prior to enactment of Electricity Amendment Bill-2022, launched a fierce attack on the Discoms by enforcing various schemes. As per prescription of the World Bank, the MoP forcefully brought in the Revamped Distribution Sector Scheme (RDSS) in 2021. The state government, Discoms and their consumers have to bear the entire burden of capitalised debt of Discoms.

The objective of the RDSS is to separate agricultural customers and to remove cross-subsidies to regulate tariffs of low-end consumers. Farmers will face shortage of water for irrigation, which will pose a serious threat to the country’s food security. Apart from this, it will force consumers to buy electricity at market driven prices. In addition, it will reduce employment significantly due to implementation of online mode. It will increase electricity tariffs for mandatory inclusion of private renewable energy sources.

For installation of smart meters under RDSS project the GOI has mandatorily imposed the prepaid system. The total expenditure of the RDSS scheme is Rs.3,03,758/- crores. Out of this Central grant is Rs 97,631/- crores, and rest Rs.2,06,127/- crores, shall be a burden on the state government, Discoms & general consumers. In this way, the GOI is moving ahead to weaken Discoms and pushing harmful clauses of the Electricity Bill-2022 for privatisation.

Under the RDSS project, each Smart Meter will cost Rs 7,000-8,000. The maximum life of these meters is 7-8 years. Therefore, meters are to be replaced after every eight years, which will be a burden on the consumers but big business for the manufacturing companies. For example, considering India’s 26 crores customers, it will come to 26 crore x Rs 8,000 =Rs 2,08,000 crores which have to be borne directly by the public. Half of the project cost can be used for infrastructure upgradation of the entire distribution system.

It must be clearly understood that this scheme has nothing to do with network development. The main purpose of prepaid smart metering is to collect money in advance for ease of doing business for private companies. The present scheme of smart meter is based on the TOTEX model, which covers price of the meter, head end system, meter, data management, communication system, cloud storage charge, charges for software tests and cyber security and operation and maintenance charge for 93 months. All these different spheres pave way for lucrative business for the private players, leaving the common people’s fate in their hands.

Another ruthless attack is introduction of the Time of Day (ToD) Tariff and rationalisation of smart meters by amending Electricity (Right of Consumers) Rules -2020. Under the ToD Tariff system, the tariff during solar hours (duration of 8 hours in a day to be specified by SERC) shall be 10 to 20 percent less than normal tariff while 10 to 20 percent higher tariff during peak hours and will be applicable immediately after installation of smart meters, latest by April 1, 2025. During daytime the tariff shall be less when power use is less but in evening to late night when power consumption is unavoidably high, the tariff shall be higher. It will be like penalising the consumers for using the electricity when they really need it, as a part of their basic need & right.

This is a clear attack on the consumers and Discoms and it is also against the federal structure of the Indian constitution. That is why some state governments have already opposed the move of pre-paid smart meters and ToD Tariff. Electricity consumers and employees and farmers from various states have already taken to the street to protest against these anti-people measures.

The above mentioned points clearly prove that the Electricity (Amendment) Bill-2022 and the installation of smart meters and ToD Tariff are anti-people, meant only for the benefit of corporate bodies. To thwart this anti-people power policy that tends to take away the people’s right to electricity, a united mass movement is the need of the hour.



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