June 02, 2020
The proposed amendments to end tariff differentiation is much needed reform in the sector but the key to reap real benefits of the proposal lies in its implementation and involvement of consumers in reform process.
Termed as one of the biggest reforms in power sector, the central government has proposed to end tariff differentiation between electricity consumers by charging them as per consumption rather than on the basis of end user.
In other progressive reforms proposed through the draft amended national tariff policy, the central government proposes to lay down standards for discoms to ensure 24*7 power, penalizing excessive load shedding and banning cost pass on to consumers for commercial losses of more than 15% during the operations.
Commenting on the amendments, Udai S. Mehta, Deputy Executive Director, CUTS International said that, “These are much needed reforms which have potential to completely revolutionize the sector. It has prospects for realizing the Indian dream of ‘Make in India’ by making power tariff competitive, at the same time reducing the plight of consumers with reliable quality of power and greater accountability within distribution companies.”
Currently, there are 50-60 electricity consume categories in India, which the proposed policy reduces to six on voltage basis. Along with the draft Electricity Amendment Bill 2020, the policy proposes direct benefit transfers to agricultural and rural consumers and reduction of cross subsidies in targeted manner. The step is supposed to increase competitiveness of manufacturing industry in the country and revive growth.
The states have currently expressed reservations against the policy, especially from the perspective of implementation. The challenge would be to practically implement these measures on ground, especially with complex political economy which plague the sector.
As per the news reports, the amended policy is approved by a group of ministers (GoM) led by defense minister Rajnath Singh and expected to be tabled to Union Cabinet soon.
Mehta in his concluding remarks said that “consumers need to be at the core of the transition and concerns and challenges of poor and vulnerable consumers at the margins should be optimally built in the reform process”.
CUTS International will be eagerly watching developments on this front.
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