India is drafting legislation that would increase competition and reduce debt at its power distribution corporations, but it also runs the danger of inciting resentment in a nation where electricity is frequently exploited as a campaign tool.
Key proposals, according to those with knowledge of the matter but who declined to be identified because the specifics aren't yet available, include allowing more utilities to operate within the same circles, requiring regulators to set tariffs based on market costs, and defining payment procedures and deadlines. The proposal will be made before the legislature during the ongoing session, which continues through August 12.
The administration of Prime Minister Narendra Modi claims that the transformation is necessary to clear a sector that is crucial to its goals for the energy transition but is clogged with $75 billion in debt. The modifications, according to critics, open the door for large corporations to dominate the market since wealthy clients would shift to private enterprises, leaving state-run utilities with customers who depend on subsidies.
The All India Power Engineers Federation, an advocacy group that develops recommendations for energy policy, is headed by Shailendra Dubey. "Power industry employees across the country will go on strike the day the bill is introduced in the parliament," he added. "This amendment restricts the use of the states' distribution networks and permits only private enterprises to selectively benefit from profitable distribution circles."
An email received on Friday after work hours was not immediately answered by a Power Ministry spokesperson. In cases when two or more suppliers are present in a single distribution circle, the bill requests that regulators set a floor rate and an upper limit tariff.
Because numerous state governments provide free power to entice voters, the issue is divisive. Politicians then pressure regulators to set artificially low tariffs, or local administrations neglect to transfer subsidies, while cash-strapped merchants postpone paying electricity producers, grid operators, and coal suppliers, weakening the entire supply chain.
Last week, Modi claimed there were roughly 2.5 trillion rupees in unpaid invoices and encouraged states to pay their debts. State governments claim that the subsidies shield small companies and vulnerable individuals.
Avik Saha, secretary of the All India Kisan Sangharsh Coordination Committee, a farmers' organization that has been opposed to the bill for months, stated that electricity is a vital commodity that needs to be regulated and governed and cannot be given up to the greed of profit. If the bill is forced through, he claimed that farmers would revolt.
