Electricity amendment bill 2021

Context

The Central government is introducing the Electricity Amendment Bill 2021 in Parliament, which is being opposed.

About the Electricity amendment bill

• The Amendment is allowing de-license power distribution to make ways for private sector players to enter the sector and to compete with state-owned power distribution companies (discoms).
• It will allow consumers to choose between the power distribution companies.

Need of the amendment

• Power distribution is mostly controlled by state-owned distribution companies. Some cities such as Delhi, Mumbai, and Ahmadabad have private players to operate power distribution.
• Discoms are struggling with high levels of losses and debt.
• All efforts to restructure and supports for the discoms are beneficial only in the short run. Even the restructuring scheme such as UDAY in 2015 was not able to bring the positive results.

Concerns against the bill

• The private players will tend to provide power to only the commercial and industrial consumers and not to the residential and agricultural consumers.
• Tariffs for power currently vary widely in India with commercial and industrial players cross subside the power consumption of rural residential consumers and agricultural consumers by paying far higher tariffs.
• Concentration of private players in the profit-focused lucrative urban-industrial segments would impact poor and rural consumers.
• Cherry-picking by the private sector, till the time the tariff structure builds in cross-subsidies.