Why Electricity (Amendment) Bill, 2021 threatens to be short circuit between Centre and West Bengal


Mamata Banerjee has termed the proposed legislation as “anti-people” and said it would promote crony capitalism

A man looks at towers carrying electricity power cables in Mumbai. Currently, Mumbai, Delhi, and Ahmedabad are the cities where private players are operating the power distribution. AFP

The face-off between the Centre and the Mamata Banerjee-led Trinamool Congress in West Bengal added another chapter on Monday when Power Minister RK Singh shot off a letter to the chief minister in response to her letter to Prime Minister Narendra Modi, protesting the ‘anti-people’ Electricity (Amendment) Bill, 2021.

He wrote in his letter that West Bengal Chief Minister Mamata Banerjee is trying to protect the private monopoly in Kolkata’s electricity distribution by opposing the draft bill.

As the legislation adds to the list of issues that Mamata and Modi have faced off on, here’s a clear understanding of what the bill proposes and why it’s a sticking point between states and the Centre.

What are the bill’s key proposals?

The Amendment is bringing in provisions to de-license power distribution allowing private sector players to enter the sector and compete with state-owned power distribution companies (discoms).

The move would allow consumers to choose between power distribution companies.

Finance Minister Nirmala Sitharaman had announced in the Union budget that the government would bring a framework to allow consumers to choose between power distribution companies.

Power distribution in most of the country is currently controlled by state-owned distribution companies with some cities including Delhi, Mumbai and Ahmedabad being exceptions where private players operate power distribution.

It mandates that all electricity distribution licensees should purchase or produce a minimum specified quantity from renewable energy sources as a percentage of their total electricity consumption.

It also proposes that a selection committee will be constituted to select the chairperson and members of the Appellate Tribunal (APTEL), the central and state regulatory commissions (CERC, SERCs) and the ECEA.

Objections to the bill

States are concerned that allowing the entry of private players could lead to “cherry-picking”, with private players providing power to only commercial and industrial consumers and not residential and agricultural consumers.

Mamata Banerjee in a letter, protesting the proposed legislation, wrote, “It would lead to a concentration of private, profit-focused utility players in the lucrative urban-industrial segments while poor and rural consumers would be left to be tended by public sector discoms”.

Goutam Deb, Chairman of Board of Administrators, Siliguri Municipal Corporation, said that Chief Minister Mamata Banerjee is rightly opposing the Centre’s move as it will hike electricity bills and will prove to be disastrous for the people.

She also added that the Bill is anti-people and would promote crony capitalism.

The states are also concerned with higher penalties for failure to Renewable energy Purchase Obligations rule and the load dispatch provision.

Mamata said in her letter to the PM that the proposed amendment “strikes at the roots of federalism”.

The West Bengal chief minister added that the reduction of the role of state PSUs, the unchecked enhancement of private players and curtailment of the authority of the states in this particular sector imply a sinister design.

“The dilution of the role of the State Electricity Regulatory Commission and the state distribution companies implies a political design to demolish state bodies and domestic industries. Direct interference by the Central government in activities involving distribution will not at all be helpful to take care of the interest of the common people and the states,” she added.

‘Power’ battle

Union power minister Singh has raised doubts over Mamata’s intentions in opposing the Electricity (Amendment) Bill, 2021 and asked why she wants to protect private monopoly in electricity distribution, especially in Kolkata.

Singh stated, “…the private distribution company in Kolkata has one of the highest tariffs in the country and is a monopoly. If the proposed amendments happens that company will face competition. Why you want to protect this private company from competition is not clear.”

The minister also explained in the letter that other provisions like cross-subsidies will be applicable after the implementation of the proposed bill.

Singh also pointed out that the billing efficiency of West Bengal State Electricity Distribution Company is only 81.43 percent, compared to the national average of 85.36 percent, and the aggregate technical and commercial losses stand at 20.40 percent.

On Mamata’s criticism that the states weren’t consulted, he said it was “incorrect”. “The draft bill was circulated to all states for their comments. After the receipt of comments, detailed discussions were held with the states region-wise,” the minister wrote.

Speaking on the issue last month, Singh had said, “Licence raj has to go, so that investors can come in this sector. If no investment comes, then we are in darkness.”

With inputs from agencies

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