Defeat BJP to Safeguard the Power Sector
Sudip Dutta
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THE upcoming general election holds significant importance. Throughout the campaign period, a wide range of issues will be discussed and debated. Among these issues, the power sector policy of the ruling government has stood out as one of the most pressing concerns. The tenure of Modi has had a disastrous impact on India's public electricity sector, resulting in an increasingly heavy burden on the people of India.
Over the past decade, there has been a consistent upward trend in the average cost of power supply in India. Specifically, the cost has risen from Rs 5.03 in 2013-14 to Rs 7.00 in 2022-23. Moreover, the central government has mandated an increase in the utilisation of imported coal, which has imposed a burden of Rs 42,000 crore on the power purchase bills for DISCOMs in the previous year. Furthermore, the government's attempt to conceal the price hike resulting from deceitful coal imports by the Adani group has only exacerbated the cost of power procurement for utilities. Alongside these developments, transmission charges have also escalated, resulting in a 71 paisa increase in the average power purchase cost between the financial years 2022 and 2023.
Shortly after assuming office, the current government has imposed multiple taxes and duties on coal, such as a 14 per cent royalty on the base price, a 5 per cent Goods and Services Tax (GST), a GST compensation cess of Rs 400 per tonne, corporate taxes, and higher railway freight charges. As a result, these taxes have greatly increased the cost of electricity for consumers. Furthermore, the Modi government introduced the Electricity (Amendment) Bill. The latest version of the bill in 2022 states that private distributors are not obligated to invest in distribution infrastructure. On the contrary, state power utilities are compelled to make their infrastructure available to private competitors, all while remaining responsible for maintenance, losses, and network development expenses. In addition, private distributors have the right to seek compensation for breakdowns, and private generators receive the same advantages as private distributors.
The central government is attempting to eliminate the existing cross-subsidy. Currently, heavy industries and large commercial users contribute to a subsidy that supports agriculture, MSME, and low-capacity domestic consumers. This subsidy has played a crucial role in establishing India's food sovereignty, supporting small to medium-scale commodity production, and assisting farmers and unemployed youth with a minimum income. However, discontinuing this support will lead to a sudden increase in the price of retail electricity, resulting in payment defaults, disconnections, and denial of electricity service.
Without the cross subsidy, farmers using 7.5 HP pump-sets would have to pay over Rs 10,000 per month for electricity, making the cost of irrigation unbearable. This would force struggling farmers, who already face increasing cultivation costs, to rely solely on unpredictable rainfall for their crops. Implementing Direct Benefit Transfer (DBT) for agriculture would also exclude the true cultivators, such as landless individuals, tenants, and sharecroppers, who are the actual payers for electricity. The deceptive nature of DBT has become evident through the rising prices of cooking gas, which has forced people to revert to using non-LPG traditional fuels.
Having failed to pass and implement the Electricity Amendment Bill 2022, the power ministry issued a notification on June 1, 2021, to introduce the Market-Based Economic Dispatch (MBED) programme. This programme aims to establish a virtual private market system in which state generators and state distribution companies will participate, resulting in dynamic electricity prices set by private players. However, there are concerns about the potential manipulation and control of the market by large private players.
This is just the beginning of a worrisome plan. The ministry of power has now introduced the alarming smart metering project, which aims to separate agricultural and non-agricultural consumer lines, creating division and eliminating cross-subsidies. Ultimately, this will subject every consumer to market forces when it comes to their electricity bills. Additionally, this scheme will lead to significant job loss in the electricity sector. Every consumer will need to pay between Rs 8,000-12,000 for the installation of a prepaid smart meter, which has a lifespan of approximately 7-8 years. With around 260 million consumers in India, this means collecting Rs 2.6 trillion directly from the public. Notably, major players like Adani and Tata are applying for the installation of these smart meters.
Consumers with a lower approved contractual load may face difficulties if their consumption exceeds the sanctioned limit. In case of technical issues with the meter or if consumers are overcharged, it is necessary for them to submit a complaint to the third-party smart metering agency. If power is disconnected due to insufficient balance in prepaid smart meters, even if it is the fault of the metering agency, consumers will be subject to a fine and reconnection may take several hours. Additionally, the cost of power is increasing dramatically. On April 1, 2022, the Electricity Commission directed power exchanges to establish bidding prices ranging from Rs 0-12/unit. However, due to the dominant position of private players in the market, the tariff often exceeded Rs 20/unit. Furthermore, on February 16, 2023, the Modi government raised the maximum allowable price to Rs 50/unit! Can you imagine having to pay Rs 50 for a unit of electricity?
While discussing the risks of integrating the smart metering system with dynamic electricity pricing, the central government unexpectedly made an amendment. On June 14, 2023, they revised the Electricity (Rights of Consumers) Rules. According to this amendment, all consumers will immediately transition to Time of Day (ToD) tariff after installing a smart meter. This means that electricity prices will be higher in the evening and at night. Household and commercial consumption is typically higher during these hours, as well as major irrigation activities occurring after sunset. As demand increases during peak hours, consumers will need to pay progressively higher dynamic tariffs for their electricity usage.
This is undoubtedly a major setback for India's public electricity distribution sector. It will result in widespread power outages and threaten food security in our country. It is an attack on India's federal structure. The time has come for us to come together and take decisive action! The ruling Modi government needs to be ousted. We must urge all political parties participating in elections to reverse these harmful electricity policies and develop a comprehensive strategy to safeguard the right to affordable electricity. This is a critical fight that India cannot afford to lose, both for the present and for the future of our nation!
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