In setback for power reforms, government dilutes Bill

NEW DELHI: The government has dropped four key proposals in the draft

Bill

to amend the Electricity Act of 2003 that aimed for far-reaching reforms to improve transparency, instill accountability and usher in bipartisan regulatory platforms for tariffs and contracts -- the last two being responsible for many of the problems afflicting the sector.


The dropped proposals are: creation of

Electricity Contract Enforcement Authority

(ECEA) to adjudicate on contractual disputes; direct benefit transfer of subsidy, which was opposed by many states; a single selection committee for appointment of chairman and members of state and

Central

tariff regulators; and implementation of distribution sub-licensee.

The power reforms Bill’s withdrawal was one of the demands of farmers agitating against the Centre’s three farm laws. Faced with elections in several states, including the politically important UP, the Centre last month unconditionally repealed the farm laws.

The scrapping of the key proposals indicates the Centre’s bid to avoid sparking further confrontation with farmers, who have since called off their stir, even on any small issue.

But power ministry spin doctors went out their way to point out that the proposals were scrapping on the basis of “feedback from stakeholders” to the draft published for public comment.

Many states, the most notable being

West Bengal

, have been opposing these provisions, saying they were against the spirit of Federalism and usurped on power of states. The demand for the Bill’s withdrawal by farmers only added wind to the Opposition’s sails. The power unions also joined the opposition bandwagon, saying these threatened job security – often an euphemism for inefficiency.

But the withdrawal of the provisions will be a setback for investors looking for transparency in implementation of contracts, instead of wanton violation by state governments due to political expediency. The move will also challenge measures to improve discom finances through timely and reasonable tariff revisions.

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