 Hello and welcome to NewsClick. Today we are going to talk about the Electricity Amendment Bill 2020. And we are joined by Tejal Karnatkar of the Energy Environment Program, the National Institute of Advanced Studies, Bangalore. Tejal, thank you so much for joining us. Now, this is the fourth version of this Electricity Amendment Bill that has been introduced by the Modi government. And this is being introduced at a time when the COVID-19 pandemic is on. There are a lot of issues being faced by the country. The COVID-19 pandemic has shown that state services and public services are really essential as far as the people are concerned. But this bill seems to be moving in a completely different direction. So could you tell us about the kind of structural changes that this amendment seeks to bring? You are absolutely right. One is it's an absolutely bad time for them to be pushing this bill. Even otherwise, the bill is pretty bad. But this in particularly because states have been fighting the COVID-19 fight, there is no time for people to be able to respond to this. Thankfully, they have now extended the deadline till when you could respond to the bill. But there are four major things about the bill that I think are important. And this is sort of carrying forward from the Electricity Act 2003 itself, which first introduced major changes in the way in which we thought about the electricity sector. Since then, and since the 19 structural changes that were implemented in the sector since 1991, there has been a continuous encroachment of the centre on what is a subject on the concurrent list. You can see this in pushing off renewable energy targets from the centre on to the states and many other things. But one of the things that this new bill I think does is like never before it increases central central control, control of the central government in the electricity sector, while states simply have to bear the burden and be onlookers. They're very little wiggle room in terms of making policy and even regulating. They push even more aggressively the model of privatization, which despite many, many attempts for the last 30 years since the reforms were introduced in the sector have failed. There's a refusal to learn from history on this count. There is a much more aggressive move to eliminate cross subsidies and replace them with this direct benefit transfer of subsidies from the state governments directly to the beneficiaries, not even to the utilities in question. How the states which are already dealing with extremely empty coffers are going to manage this is another story. And there is an even bigger push for renewable energy again in all of this while centralizing the policy making on renewable energy. This, of course, we know the prime minister, you know, he wants to make this his sort of legacy, the renewable energy target. So there's a push for this. And it is not really very clear why at this point of time, because all indications are that even without COVID-19, we were in pretty bad shape in terms of where our electricity demand was heading. We were much lower than what we had anticipated. With COVID-19, we have already backed down a lot of our generation quite considerably, thermal more than 25%. And so we are in a situation of power surplus. Why push for more renewable energy at this point of time is, you know, a serious question. So the key one of the key aspects you mentioned is the privatization element of this. So how would you explain a bit more how this amendment actually takes it forward in terms of how the distribution and is going to take place? So the act itself in 2003 said that, you know, we should privatize especially two segments. One is the generation segment of the power sector and the other is a distribution segment. Broadly, the sector is divided into three segments. It's power generation, transmission and distribution. Transmission is like the high voltage transmission of electricity from the generation stations to the distribution companies. Distribution is what takes it from the high voltage transformers to end users. So the first and the last segment were sought to be privatized. What has happened in the last 30 years is that generation, they have been fairly successful in privatizing. We've had a lot of investments in generation and that's part of the problems that ails the sector currently and we'll talk about this a little bit more. The distribution segment has not been, they have not been successful in privatizing it. What they have tried to do, another version of this bill came up in 2018 where they had argued for what is known as carriage and content separation. This was directly lifted, even the terminology was lifted from the World Bank report of 2014 where they say, okay, what happens is that the state government or the state distribution utility is in charge of the wires and the infrastructure of supply and the actual supply of electricity will be done by private distributors. This of course was opposed by many people. Now what they say is the same thing in a different language, they say that what should be done is introduction of distribution sub-licenses or franchises. The difference between sub-licency and franchisee, whether it is difference in scale or something like that is not clear from the bill at all. But what these sub-licencies will do is they won't require a new license. All they would require is a current distribution utility will hand out a portion of their region to these sub-licencies and in this region the sub-licency will then buy power from somebody and sell to the end users. This according to them will reduce the, is supposed to have two benefits. One is it will reduce the cost of power procurement. The other is it will reduce the cost of operation of the grid by reducing the TND losses. This has been tried before and has failed quite miserably in both cases, even when there has been cherry picking, meaning only the urban clusters, urban agglomerations have been sought to be privatized. Nobody is interested in no private distribution licensee is interested in supplying power to rural areas because these are not profit-making consumers. They are not consumers that can pay the full cost of electricity. So they are interested in urban areas and even in these urban areas, this has not been even in a place like Mumbai, for example, where electricity distribution is privatized. Earlier reliance now Adani in the suburban part except for some part of South Mumbai, the rest of it is privatized. There have been protests, there have been continuous tariff hikes and cost to consumers has not been able to reduce. In Delhi, the only way in which this has been possible where we also have privatized supply is where the distribution by creating what are known as regulatory assets. So because there has been an increase in prices that has been allowed, but because you couldn't transfer those prices to the consumers, you create an asset which can then be paid for at some point of time later. One last thing is that Orissa is the only place where there was a non-urban consumers as well that were included. There were three attempts at privatization for the last 25 years and they have failed. The distribution sector is back with the government now in worse shape than when it was handed over to the private distribution company. And these are privatization of TISCOM models. There were franchisee models in Vibhandi, Ahmedabad, Agra, etc. Even here the franchisees have been unable to break even, even though they have stuck to only urban agglomeration. So the other aspect you are talking about is the issue of cross-up cities itself. And in this context we are also looking at the possibility of states providing benefits to farmers who are going through a very bad time right now. So all this actually becomes, I understand, far more limited because of the centralization of power that is inherent in this proposal. Yes, one is, let's talk about the elimination of cross-subsidies first. This has been an agenda for a long time. In the 2003 Act there was an elimination of cross-subsidy clause which was then, it was in 2004 when the UPA-1 government came to power as part of the common minimum program that it was a decision because of the pressure of the left parties that elimination of cross-subsidy be changed to reduction in cross-subsidies and it was changed. It was amended. This is of course now again sort of sort to be amended in the new bill. And what has been said is that the regulators are supposed to decide cost based on cost of supply which means that the regulator is not supposed to take into consideration any cross-subsidy. So what happens is that the consumer who is the most expensive to supply power to is actually the rural consumer because you have to pay for the distribution lines which are much longer, step down, transformers etc etc. And so the highest cost of supply is to the rural consumer. The urban industrial consumer actually has a low cost of supply but you can't take into consideration any cross-subsidies or subsidies here while you do the calculation. So now whatever the state decides that okay, I want to subsidize this rural consumer because after all that rural consumer needs subsidy and it's also the consumer who votes the governments in power. So they need to be able to supply power to them. What do they have to do? They have to transfer that money directly through direct benefit transfer to the consumers. Now the states have not been even compensated for GST even during a crisis right now and post GST their revenue streams have all been completely squeezed. Where is the state going to be able to provide this for if you don't allow for cross subsidy? And this is of course not even taking into consideration the problems with direct benefit transfers. What happens if the transfers don't happen on time? The consumers get basically cut off which is agricultural consumers at the height of when they require power might be cut off. Other consumers, even small enterprises, household-based enterprises, MSMEs, all of these are going to need support coming out of the COVID-19 crisis. The current bill is designed to burden them further, not to provide any relief whatsoever, not even to ease business at this point of time, even for smaller industrial units. So and finally just a larger question sort of say in the sense that what is the ideological framework of a bill like this at a time like this especially because the states themselves have expressed opposition, many of the opposition parties have also said that at least defer the consultation which they have done to some extent but the demand is for extending it till September at least. So what is the framework in which this bill is being introduced? One can see that this is part of a larger way in which things have been happening. You see the amendments that have been proposed to labour laws across states taking back labour rights that were hard fought for and won over many, many years. This is part of the same kind of logic that you are in a situation of crisis when people are unable to mobilize also, they are unable to demand their rights and you push for your agenda of curtailing subsidies, curtailing rights, curtailing any kind of protection that labour has had over a period of time that your most vulnerable sections of your population have had over a period of time and push aggressively a neoliberal agenda that has been in the offing and that has been resisted so far. I mean it's not as if that agenda has not been pushed and implemented in the last 30 years, it has been but it has met resistance at every point of time. We are in a situation where there is resisting is difficult because our normal modes of resisting protesting are not available to us and so this gets used as an opportunity to push this and for all of its claims of being more scientific, more learned, more thought out policy, evidence based policy etc. etc. This kind of pushing all of these amendments at this point of time is absolutely unscientific, is extremely dogmatic because the current crisis of the power sector even before COVID especially in the power sector is a result of this push, this neoliberal push for privatization. You take the NPAs in the power sector, NPAs with the banks, half of which are because they depended on the markets to sell their power and the demands didn't meet their expectations. All of this is because of the kinds of policies that have been pushed for the last 30 years. More pushing them more aggressively at this point of time especially when we are facing an unprecedented economic crisis is it completely defies logic. Thank you so much for talking to us. Thank you for having me. That's all your time for today. Keep watching NewsClick.