Electricity (Amendment) Bill 2022 – A regressive step for Power Sector, Electricity Employees and Consumers


Pamphlet issued in public interest by the National Coordination Committee of Electricity Employees and Engineers (NCCOEEE)


(English translation of the Hindi pamphlet)

Electricity Amendment Bill 2022 – A regressive, anti-people step for employees as well as consumers of the power sector


By means of the Electricity (Amendment) Bill 2022 the central government is going to give more than one electricity distribution company the licence to distribute electricity in a territory. The government is claiming that through this the consumer will be able to choose a distributor, just like they do in the case of a mobile SIM. However, in reality the choice will be there not for the consumer but for the electricity distribution companies to earn profit.

As per the new provisions, the new electricity distribution company will be able to use the existing government owned electricity distribution network. The new electricity distribution companies in the private sector will not be under the Universal Power Supply Obligation. This means that they will not be obliged to provide electricity to consumers of all grades. The Universal Power Supply Obligation will be only for the companies in the government sector.

Come, let us understand what the real meaning of this provision is. The electricity consumers are divided into several grades. If we consider that they are divided into two grades, then those of one grade are supplied electricity at less than cost, while those in the other are charged at rates slightly more than the cost. Mainly farmers in the agricultural sector, domestic consumers who are below the poverty line and domestic consumers who use less than 500 units of power are those who are charged less than the cost. Industrial and commercial establishments are charged at slightly more than cost. According to the new provisions, when private distribution companies will not be obliged to supply electricity to all grades of consumers, naturally the private companies will not supply power to consumers where loss would be incurred, and will only take licences to supply in the profit-making parts. As a result government owned companies will lose the consumers from which they make profit and these companies which are already facing a financial crisis will, by default, be turned into loss-making ones. It is clear that the Electricity (Amendment) Bill 2022 will not give a choice to consumers, but will do so for private companies.

The Bill also has a provision that private electricity distribution companies will use the distribution network of the government-owned companies and that government companies will have to fully allow the private companies to do so. Thus, without spending anything on the setting up, running and maintenance of the network, the private electricity distribution companies will only do the job of earning profit. With the rise in the number of consumers, the power load will increase and the entire work of strengthening the network will fall on the shoulders of the government companies. Private companies will merely pay the Wheeling Charge and will use the government network to earn profits.

As the new companies in the private sector will not have the Universal Power Supply Obligation, they will naturally supply only to the profitable consumers, that is the industrial and commercial consumers and thus the government companies will lose the profitable sector. Those consumers who are provided electricity at rates less than the cost are said to be subsidised, and those who pay slightly more cross subsidise.

The Electricity (Amendment) Bill 2022 also has the provision that the Clause 61 (G) of the Electricity Act 2003 shall be revised and the licensee of electricity distribution will be given rights to recover their full costs. The Electricity Regulatory Commission of the state will only decide the maximum and minimum tariff for every grade of consumers. When the Tariff Policy is changed in this manner, the biggest hit will be on the subsidised consumers. The average cost in the country to take electricity up to the door of every consumer is Rs. 7.45 per unit. As per the Companies Act private companies are entitled to earn at least 16% on this. Thus the minimum tariff for consumers will be at least Rs. 9 to Rs. 10 per unit.

If a farmer runs a pump set of 7.5 horse power for irrigation and uses it for 6 hours every day, then he will consume on the average 34 units of electricity daily. At the rate of Rs. 10 per unit, he will have to incur a daily cost of Rs. 340 and a monthly cost of more than Rs. 10,000. Those who live below the poverty line as well as consumers in general will also have to suffer this blow.

The burning example of how the consumers are hurt is before us. The central government put tremendous pressure on the state electricity generation companies to import 10% coal. Those generation companies that do not import 10% coal till 15th June 2022 would be supplied 5% less domestic coal and from 31st October 2022 they would have to import 15% coal. The cost of imported coal is about Rs. 20,000 per tonne whereas domestic coal costs Rs. 2,000 to Rs. 3,000 per tonne. In order to recover the increased cost due to imported coal from general consumers, the government issued an order for those electricity production houses that have been constructed to use imported coal. By changing the electricity purchase contract it raised the per unit rate of electricity from Rs. 2.24 to Rs. 6.11. Taking cognizance of this the Central Electricity Regulatory Commission itself has now allowed such private electricity companies to increase its rates and the states have also started the process of recovering the cost of imported coal from consumers. In Uttarakhand all grades of consumers will have to pay 6 paise more per unit from July 30 in order to recover the cost of imported coal. The process of burdening consumers in general with imported coal has been started in this way.

Through the Electricity (Amendment) Bill 2022 the subsidy for farmers and domestic consumers will be ended, the burden of imported coal will be on the shoulders of consumers in general and the thousands of crores of rupees of cost for developing the software and metering for the multiple supply licensing system will also be recovered from ordinary consumers.

The Electricity (Amendment) Bill 2022 will break the backs of ordinary consumers. In the previous year the central government had given a written assurance to the Samyukta Kisan Morcha that there would be extensive discussion with the farmers and other stakeholders before the Electricity (Amendment) Bill 2022 is tabled in the parliament. Preparations are being made to pass this Bill in the parliament without any discussion with farmers, electricity employees and general consumers; this is clearly in violation of the assurance given by the central government to the Samyukta Kisan Morcha.

This is a clear betrayal in the name of revising the Electricity Act 2003 and it must be strongly opposed. The privatisation of profit and the nationalisation of losses can never be accepted. It is time for farmers and ordinary consumers to be organised along with the employees and engineers of the electricity sector with the resolve to Save the Power Sector and Save the Country and get ready for a decisive struggle in the interest of the country. We will not allow the power sector to be a slave to a few corporate houses.

Electricity is our fundamental right.

Save the Power Sector and Save the Country!
– Inquilab Zindabad –

Issued in the public interest by the National Coordination Committee of Electricity Employees and Engineers.

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