Govt rolls back proposals in draft power Bill, drops subsidy abolition

The Central government has decided to roll back several proposals introduced in the draft Electricity Bill, 2020. The Bill will no longer have a provision on abolition of electricity subsidies.

This would also impact the Centre’s commitment to introduce Direct Benefit Transfer (DBT) in the electricity sector. In the latest round of changes in the Bill, the proposal of DBT has been dropped too.

The Centre, which is pushing reforms in the power distribution segment, had proposed to remove the term ‘subsidy’ in the first draft of the over-arching Electricity Bill last year. It had instead proposed DBT in electricity, like in LPG.

Many states have been critical of the move to end subsidised power rates. Even farmer bodies, during their recent agitation, had come down heavily on the proposal. While a large number of states provide subsidy on electricity bills to agriculture consumers, some offer it to a select set of users or like in the case of Delhi, up to a certain amount of electricity consumption.

R K Singh, union minister for power, new and renewable energy, on Tuesday had said there’s no provision in the proposed draft Bill pertaining tofarmers. “There is no farmers-related provision in the (Electricity Amendment) Bill. The Bill is under examination of the government,” Singh had told reporters.

First made public in April 2020, the Bill is yet to get the Union Cabinet’s approval.

In February, the Centre had amended the Bill abolishing the concept of power “distribution licence”, thereby opening doors for any company to supply electricity to an area, after necessary regulatory approval. It also seeks to allow two or more discoms to register and distribute electricity in the same areas.

This proposal remains intact in the latest round of the changes in the Bill, according to the text reviewed by Business Standard.

Another proposal that has been dropped is to have an over-arching body for resolving any matter relating to contracts of sale, purchase and transmission of power between two or more parties. The creation of the Electricity Contract Enforcement Authority (ECEA) received mixed responses but several experts pointed out that its duties and roles will overlap with the existing State and Central Electricity Regulatory Commissions (ERCs) and the Appellate Tribunal of Electricity.

The Centre, in the new text, has clarified that the appointment of state ERCs will remain in the hands of the state governments. This was a contentious issue for some non-BJP ruled states. The proposal to have a ‘single selection committee’ for appointment of chairman and members of state and central ERCs has also been dropped.

POWER REFORMS: ONE STEP FORWARD, TWO STEPS BACK

• Centre rolls back direct benefit transfer in the power sector
• Creation of Electricity Contract Enforcement Authority also dropped
• Selection of chairman and members of State Electricity Regulatory Commissions to remain with states
• No change in proposals to abolish distribution licensee, increasing privatisation of discoms