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Wednesday, September 28, 2022

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How The Screws Are Getting Tightened On Power Discoms

This is seeing traction now with the power grid floating a tender for 10 million smart metres, the largest ever. The scheme is ultimately expected to be ramped up to 250 million domestic consumers and will significantly impact the current malpractices of non-metering, fictitious readings, tampering and collusion.

The implications are many, as the cat is being prepared to be set amongst the discom pigeons.

Opposition parties have cried foul and said the bill is against the federal structure, as electricity is a state subject and is in the concurrent list of the Constitution.

Further, the pressure and penalties on regulators, which are there in the bill, impacts their independent functioning. There is the added criticism that allowing new distribution companies to use the existing infrastructure is nothing but privatisation by stealth.

Power sector unions claim this will be the death knell for existing state-owned discoms, as they bear the onus of the Universal Service Obligation, whereas the new ones would target only the richer, creamier, urban segments of various markets.

There do exist apprehensions that the deliberations of the Parliamentary Committee examining the provisions of The Electricity Amendment Bill, 2022 will be so long-winded, that it may not ultimately see the light of the day, given what would be the stridency of the opposition to it from different quarters.

Many have suggested that it may have been wise for the government to have used a prior consultative approach like a GST-type Consultative Council involving the states.

The current bill comes against the backdrop of three decades of failed attempts to reform the electricity distribution sector.

The unbundling of the State Electricity Boards started in the early ‘90s, followed by the Montek Bonds of 2002.

The Accelerated Power Development and Reforms Programme of 2002 and The Electricity Act 2003.

Ujwal Discom Assurance Yojana or UDAY came in 2015, and in June 2020, the finance minister announced a special liquidity scheme to rejuvenate the ailing sector, following up with the current RDSS which is to install smart metres and related infrastructure.

Thus, the fate of the latest attempt—the passage of the 2022 bill to Parliament—is anxiously awaited as are the other non-legislative measures announced.

At the heart of the matter is the economic competitiveness of India, as you gradually see the screws getting tightened on the performance of discoms.

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