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What is Electricity (Amendment) Bill 2020 and why farmers are opposing it

Farmers protesting against the three farm laws passed by the Centre are also against the proposed Electricity (Amendment) Bill 2020.

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New Delhi: Farmers from Punjab and Haryana have been agitating at the Singhu border between Delhi and Haryana for a week now. While their protest is centered around the three contentious farm laws passed by the Centre, the farmers are also against the proposed Electricity (Amendment) Bill 2020. 

Farmers fear the growing privatisation of the power sector and don’t trust the state governments to pay their subsidies on time, while experts believe that the opposition is largely “ideological”. 

States, on their part, feel the proposed amendments will lead to the Centre taking up more responsibility in the power sector. 

The Union power ministry had come out with a draft of the Electricity (Amendment) Bill in April.

Farmers in Punjab have been protesting against it ever since.

In October, Punjab Chief Minister Captain Amarinder Singh had said, “Three farm legislations along with proposed Electricity (Amendment) Bill, 2020 are clearly against interests of farmers and landless workers and time-tested agricultural marketing system not only in Punjab but also in Haryana, and Western Uttar Pradesh.” 

On 15 September, the Telangana State Legislative Assembly unanimously adopted a resolution that opposed the Bill. The All India Power Engineers Federation (AIPEF) held a protest on 26 November opposing the privatisation of Discoms (distribution companies).  

Also read: India’s power market is booming. But it’s bad for business

What are the amendments?

The Electricity (Amendment) Bill 2020 seeks to propose amendments to the Electricity Act 2003. The 2003 Act governs the power sector structure and policy. It recommends the generation, distribution, transmission, trading and use of electricity. Further, it also sets rules and regulations for regulatory authorities in the state and central departments of the power sector. The first few amendments introduced to the Act were in 2014

The 2020 amendment Bill has proposed the setting up of a National Selection Committee instead of a separate selection panel for the appointment of state electricity regulatory commissions (SERCs). 

It also seeks to establish an Electricity Contract Enforcement Authority (ECEA), which will enforce a performance of contracts in sale, purchase and transmission of power, and proposes Direct Benefit Transfer (DBT), a scheme launched in 2013 aiming to transfer subsidies directly into the beneficiaries’ accounts. 

This amendment proposes tariff- and subsidy-related measures, which aim to ease the financial health of discoms, which are mostly state-owned. 

It further advocates a renewable energy approach and has appointed the central government in conjunction with state governments to prepare for a National Renewable Energy Policy “for promotion of generation of electricity from renewable sources”.

Centralisation ‘not a good idea’ 

A former employee of the Central Electricity Regulatory Commission (CERC), who didn’t wish to be named, told ThePrint, “The objective of the Bill is progressive but the environment in the country is not progressive. It is progressive only in the sense that the government in all honesty wants the subsidy to be directed into the accounts of consumers…To the states, it appears that their powers are being taken away.”

One of the major criticisms faced by this Bill is that the Centre is taking over a lot more responsibility in the sector. A Delhi government official, who didn’t want to be quoted, told ThePrint: “In my opinion, this amendment is biased towards centralisation of things. Electricity has been a concurrent subject. State and Centre both have a say on it but the Centre is encroaching on State’s jurisdiction.”

Speaking to ThePrint, Ashwini K. Swain, Fellow, Centre for Policy Research, echoed the sentiment, “Centralisation is not a good idea… The government should find ways of working with the states on how to build state capacity because electricity is a highly political service and each state has its own political economy.” 

Privatisation a ‘band-aid approach’ 

“This Bill has envisaged corporatisation and privatisation of discoms, which are doing abysmally in the entire country except certain pockets,” said the Delhi government official quoted above. 

He added that the task for distribution had primarily been under the state’s ambit and the generation and transmission under the Centre. “The Centre was not able to do anything on the distribution side because it was primarily with the states, so they pushed for privatisation.” 

Swain maintained that a substantial push to privatisation won’t solve problems. “It is just a change in ownership so it won’t solve any governance or behavioural problems in the power sector. Just because you transfer a company from public ownership to private ownership, there’s no guarantee it will work,” he said.

“This is a band-aid approach to reform the power sector,” Swain added. “The sector has been struggling with a chronic structural problem and this amendment is just trying to put a band-aid on the wound.”

He said there had been amendments in 2014 and 2018 as well and that this amendment didn’t represent a structural approach to power sector improvement. According to Swain, the opposition to privatisation is largely “ideological”. 

Privatisation is not a bad idea, he said, adding that there has been some degree of improvement in other sectors after it but it can’t be posed as a “silver bullet”. “By changing ownership, you can’t change issues like demand for subsidy or where that demand is coming from, why farmers want free power etc, those leakages can’t only check with privatisation,” Swain explained. 

Also read: Mini-grids — the little-known clean energy revolution

Farmers won’t be affected, say experts 

The farmers agitation, which had started as a protest against the farm laws, has now galvanised into a campaign against private players who own toll plazas, petrol pumps as well as Adani Group’s freight trains that supply coal to private thermal plants. 

All India Power Engineers Federation spokesperson V.K. Gupta believes the Electricity (Amendment) Bill is “anti-farmer” and “anti-domestic consumer”. 

Experts, however, are of the view that the proposed amendments will not affect the farmers. Under the new amendment, farmers are to be handed a certain amount of money in view of agriculture electricity consumption. They may choose to use that money to buy electricity or use it otherwise, but they have to pay the discoms. 

“I don’t think farmers will be affected by this. They would only be affected if the original amendment was introduced,” said the CERC employee quoted above. 

“In principle, the amendment is not a bad idea. It’s not going to solve too many problems but it’s not going to hurt either,” Swain explained. 

He, however, raised some concerns regarding the lack of ownership data, implementation challenges and a trust challenge. “The farmers don’t trust that the state government will be able to provide that subsidy,” he said. 

The CERC employee pointed out that the Punjab government had failed to pay the subsidy amount for the past several years. 

Also read: Farmers’ protest a big challenge for Modi. Bigger than demonetisation, GST


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