Power reforms have taken the backseat and promises of reforms and competition have been given up by the Centre The Electricity (Amendment) Bill, 2022 proposing amendments to the Electricity Act, 2003, with the stated objective of transforming the power sector, was introduced in Lok Sabha on August 8, 2022. Facing stiff resistance from the opposition parties, it had to be referred to a Standing Committee. The Opposition parties especially those ruling the State governments opposed the amendments on two major grounds: (i) these would result in over-centralization of the power distribution (Under the Constitution, distribution is a State subject even as generation and transmission (G&T) are under the purview of the Union Government]; (ii) these curtail powers of the States...
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Category: Power purchase agreements (PPAs)
Electricity Bill: Where is the spark?
After dilution of its key provisions, the Electricity Bill, 2021, falls short of reform objectives In the draft Electricity (Amendment) Bill or EAB, 2021, proposing amendments to the Electricity Act, 2003 introduced in February last year, the Narendra Modi-led NDA Government intended to bring about two transformative reforms — de-licensing of the electricity distribution business and direct benefit transfer (DBT) of subsidy. Delicensing of the distribution business aims to bring in competition, and give the consumer power to choose suppliers (or “open access”). Even as the Union ministry of power prepares to table a Bill in the upcoming Monsoon session (2022) of Parliament, both the provisions have been dropped. Under the extant arrangements, an overwhelming share of power generated by public...
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Power sector: Missing the wood for the trees
One gets a sense that discoms are not honouring their commitments with regard to lifting quantities mentioned in the Power Purchase Agreements On October 30, 2021, the Ministry of Power notified two sets of rules under Electricity Act, 2003 viz. Electricity (Timely recovery of costs due to Change in Law) Rules, 2021, and Electricity (Promotion of generation from renewable sources of energy by addressing Must Run and other matters) Rules, 2021.The stated objective of the rules is to inter alia sustain economic viability of the electricity sector and ease financial stress of various stakeholders. An idea of the stress can be gauged from the losses incurred by power distribution companies (discoms) — the most crucial link in the supply chain....
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NEP: A bundle of pious intentions
The Government should avoid overambitious targets that will result in gross underutilisation or even scrapping of the assets already created In yet another attempt to improve the power sector, the Modi Government has come up with a new draft National Electricity Policy (NEP), the major objectives being to promote clean energy such as power based on renewable and gas without debunking coal; revitalise power distribution companies (discoms) and developing an efficient market for electricity distribution. All the three objectives are laudable. These are crucial to development of an efficient, competitive and sustainable power sector to meet the needs of the economy on a high growth trajectory while at the same time, meeting the environment goals (especially India’s commitments under the...
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National Electricity Policy – a bundle of pious intentions
In yet another attempt to improve the power sector, Modi – Government has come up with a new draft National Electricity Policy (NEP) its major objectives being (i) to promote clean energy such as power based on renewable and gas – without debunking coal; (ii) revitalize power distribution companies (discoms) and (iii) developing an efficient market for electricity distribution. All the three objectives are laudable. These are crucial to development of an efficient, competitive and sustainable power sector to meet the needs of the economy on a high growth trajectory while at the same time, meeting the environment goals (especially India’s commitment under the Paris Agreement on Climate Change). What is being done on ground zero to achieve these goals?...
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Power Struggle: Centre’s reform scheme is a mere bailout package for discoms
The Rs 3 lakh crore channeled via RLRBSD is merely another bailout for discoms. The only obligation placed on them is meeting targets they Should have to met in 2018-19 That the money is being offered on a platter is clear from virtually no obligation on the discoms (the performance targets set for 2018-19 now gets shifted to 2025). In her FY22 Budget speech, FM Nirmala Sitharaman announced that under the proposed Electricity (Amendment) Bill, 2021, the government intends to delicence the distribution business, bring in competition, and give the consumer power to choose her supplier. She also unveiled the Rs 3 lakh crore electricity distribution reform programme to reduce losses and improve the efficiency of discoms. Tantalisingly christened ‘Reforms-Linked,...
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Electricity distribution reforms – a hoax
Amidst the cacophony of farmers’ protest over the enactment of three farm laws by Modi – government (they don’t want to settle for anything short of their repeal), a demand that went unnoticed relates to doing away with an amendment to the Electricity Act (2003) that requires farmers to pay tariff for electricity supply at the un-subsidized rate even as the concerned state provides for direct cash/benefit transfer (or DBT as it is known in common parlance) of subsidy to their bank account. Reportedly, the Centre has accepted this demand. What it means is that the Centre will continue with the existing dispensation of supplying power at subsidized rates to farmers (in some states, it is even free of charge)....
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Powerless power sector
The much-touted power reforms have not taken off as netas remain in election mode. As a result, industries continue to pay high tariff and discoms continue to report losses Under the Atmanirbhar Bharat Abhiyan scheme unveiled in May, Finance Minister Nirmala Sitharaman had promised a special loan of Rs 90,000 crore to fledgling power distribution companies (discoms) to enable them to clear their dues to independent power producers (IPPs) and generators in the public sector viz. National Thermal Power Corporation (NTPC) and so on, subject to their implementing certain reforms. The Government is now keen on hiking the loan amount to Rs 1,25,000 crore and relaxing reform conditions. This is not the first time that discoms are in dire financial...
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High power tariff – no respite for consumers
For almost two decades now, the successive governments have made exhortation about reforming the fledgling power sector with the three-fold objective of (i) supplying electricity at affordable rates; (ii) reducing the burden of subsidy and (iii) make power distribution companies (discoms) viable. Whether, it is the provision for reform the power purchase agreements (PPAs), ‘open access’ under the amended Electricity Act (2003), reducing cross-subsidy so as lower tariff to industries and businesses, increasing the share of renewals in total supply, opening of power exchanges for trading of electricity, direct benefit transfer (DBT) of subsidy to the target beneficiaries and so on, the aforementioned objectives resonate in each of these reforms. Yet, it is ironical that when it comes to developing...
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Power sector in crisis, reforms a mirage
The special economic and comprehensive package ‘Atmanirbhar Bharat Abhiyan’, unveiled by Finance Minister Nirmala Sitharaman in five tranches during May 13 – 17, 2020, has two components that have a crucial bearing on the fledgling power distribution companies – commonly known as discoms. The discoms – mostly owned and controlled by state governments – procure power from independent power producers [IPPs] and public sector undertakings [PSUs] such as the National Thermal Power Corporation [NTPC] besides their own generating stations and sell to consumers. The first component provides for special loan of Rs 90,000 crore from Rural Electrification Corporation [REC] and Power Finance Corporation [PFC] to discoms to enable them to clear their dues to IPPs and PSUs. But there are...
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