Karnataka: Electricity Reforms will Ruin Development
Vasanth N K
THE Electricity (Amendment) Bill, 2022 which aims to accelerate electricity privatisation, will jeopardise the 'Gruhajyothi' scheme. This scheme guarantees 200 units of free electricity to all domestic consumers. The amendment will not only increase the cost of electricity but also pose a threat to the electricity sector and hinder industrial development. Therefore, the Congress government of Karnataka should pass a resolution in the current assembly session stating their refusal to implement the Electricity (Amendment) Bill, 2022 in the state. This resolution was demanded during a state-level convention on 'Electricity Reforms' held at Gandhi Bhavan, Bangalore on July 5. The convention was organised by the CPI(M) Karnataka state committee.
The convention was organised to address various issues arising from the implementation of the 'Gruhajyothi' scheme, as well as the recent steep increase in electricity prices and other dangerous measures initiated under the directives of the Karnataka Electricity Regulatory Commission (KERC). The larger national context of the convention was provided by the accelerated moves at electricity privatisation through the pushing of the Electricity (Amendment) Bill, 2022 in the current session of parliament.
The CPI(M) Karnataka state committee expressed support for the ‘Gruhajyothi’ scheme and defended it against criticism from the BJP and other groups who labelled it as a 'freebie' that would negatively impact the state's economy and hinder development. However, the CPI(M) also acknowledged certain shortcomings and issues in the implementation of the scheme, which were highlighted both prior to and during the convention. The major shortcomings/issues that were identified and sought to be addressed are as follows: existing free electricity schemes like Bhagya Jyothi and Kuteera Jyothi, designed for marginalised sections such as SC/STs and BPL, are being limited to their current consumption of 75 units. They are not eligible for the proposed 200 units of free electricity, which amounts to discrimination; the application process for the scheme, which requires online submission and various supporting documents, poses a deterrent and may even deny access to a large section of poor people who are unable to fulfill these requirements consistently.
The convention highlighted several major issues with the Gruhajyothi scheme and criticized certain directives of the Karnataka Electricity Regulatory Commission (KERC) that were to be implemented retrospectively from April 1, 2023. The convention specifically criticised the following major KERC directives and called for their rejection: implementation of an across-the-board electricity price hike, averaging 70 paise per unit for both LT and HT consumers. This increase will have a severe impact on MSME units and ultimately lead to a rise in overall prices; the mandatory linking of R.R. (ESCOM customer) numbers of farmers' IP sets to their Aadhaar numbers by the end of September. Failure to comply with this requirement will result in the reduction or elimination of free electricity provided to farmers. This move is seen as a step towards converting the scheme of free electricity into a reimbursement-based system, similar to the subsidy for domestic gas through Direct Benefit Transfer (DBT), which may ultimately lead to its elimination.
During the convention, K Prakash, CPI(M) secretariat member, highlighted the contradiction between the favourable political decision regarding the Gruhajyothi scheme and the ongoing efforts to accelerate complete electricity privatisation through the actions of the KERC and the proposed Electricity (Amendment) Bill 2022. He emphasized that the Gruhajyothi scheme could be at risk of being ruined unless the legalisation of the path towards complete electricity privatisation is rejected.
Prakash outlined the gradual departure from the original objectives of the Electricity Bill of 1948, which aimed to provide affordable and high-quality electricity for all and promote self-reliant development in the country. He pointed out that the process of privatisation began in the 1980s due to pressure from the conditions imposed by the IMF loan. Initially, power production was unbundled from State Electricity Boards (SEBs), leading to an increased role for Central Public Sector Undertakings (CPSUs) and private players. This resulted in a growing gap between the Average Cost of Supply (ACS) and Average Realisable Revenue (ARR), which left many SEBs struggling financially.
Despite several setbacks, such as the infamous Enron scandal and subsequent collapse, the privatisation agenda continued to gain momentum. Transmission and distribution sectors were also privatised in various regions and states. Gradually, cross-subsidies for domestic, rural consumers, and farmers were reduced or eliminated, and the responsibility for rural electrification was gradually shifted away from the government.
Prakash further highlighted the efforts made by successive central governments to legally authorise the privatisation of electricity, particularly after the introduction of neoliberal reforms in 1991. He explained the various stages of privatisation measures initiated by the Electricity Bill of 2003 and the National Electricity Policy of 2005, which were passed by the NDA-1 government and carried forward by the UPA-2 government. Since 2014, the Modi government has been actively working to accelerate the privatisation of electricity.
The current bill, known as the Electricity (Amendment) Bill, 2022, represents a significant and perilous step in this direction. The bill removes all restrictions on private players entering the production, transmission, and distribution sectors, while ensuring minimal regulation. Its primary focus is to guarantee profits for private players and transfer all costs to consumers or governments, ultimately burdening the people. The bill effectively commodifies electricity, taking the unprecedented step of unbundling the distribution sector into two components: the physical wire network and the supply of electricity. The former will continue to be managed by Electricity Supply Companies (ESCOMs), while the latter will be handed over to multiple private players. This approach aligns with the well-known neoliberal principle of 'privatisation of profits and nationalisation of losses'. Additionally, the bill encroaches heavily on the rights of states to discharge their responsibilities and make laws in the electricity sector, which falls under the concurrent list.
Prakash raised a crucial question, questioning how the Karnataka government can effectively implement the 'Gruhajyoti' scheme without resisting the process of unbundling and privatisation of the distribution sector. He pointed out that without actively opposing privatisation in general, and specifically the Electricity (Amendment) Bill, the 'Gruhajyothi' scheme itself could potentially pave the way for electricity privatisation.
The convention passed a resolution to reject the detrimental Electricity (Amendment) Bill, 2022, which poses a threat to the development of the electricity sector and industry, and leads to increased electricity costs. The convention also demanded that the Congress-led state government refrain from resorting to privatisation under the pretext of funding the ‘Gruhajyothi’ scheme. Furthermore, the convention called for the introduction of a resolution in the current legislative session by the Congress government, refusing to implement the Electricity (Amendment) Bill, 2022 in the state, and urged its passage.
It is worth noting that the states of Kerala, Tamil Nadu, and Telangana have already resolved not to implement the Electricity (Amendment) Bill, 2022. Kerala has also maintained the unified structure of the State Electricity Board (SEB), and has not resorted to its trifurcation. Additionally, the convention demanded that all necessary measures be taken to reduce costs in the electricity sector, including the cost of establishment of power plants, fuel costs (such as coal), operation and maintenance (O&M) costs, as well as transmission and distribution (T&D) losses. The judicious and efficient utilisation of available fuels was emphasized, along with the need to curb corruption in the sector.
The convention, which was attended by over 100 delegates from all over the state, resolved to take this message to every ward, village and organise struggles, build movements around the issues.
MS Meenakshisundaram, CPI(M) secretariat member, introduced the topic of the convention. Mohammad Samiulla, Leader of the All India Federation of Electricity Employees, inaugurated the convention. Gopalakrishna Aralahalli, CPI(M) secretariat member, presided over the convention.
