West Bengal under severe tariff hike and scarcity–Soumya Aich Ray

BL11_P13_POWERElectricity which is a key driver of modern civilization is increasingly proving dearer to the common people even after 70 years of independence despite the tall claims of the power that be that India has emerged as a formidable nuclear power, made considerable advancement in space technology and established herself to be one of the most sought after destinations of Information Technology.

While the people of most of West Bengal are reeling under severe load-shedding and extreme low voltage, galloping escalation of power tariff is tormenting them beyond limit. For example, in West Bengal, domestic consumption above 50 units costing Rs.1.43 per unit in 1998 soon changed to Rs. 2.75 per unit and more.

In 1991, the farmers using electricity in West Bengal used to pay about Re 0.25 per unit. The rate has shot up to sky high levels in the last 27 years. Similar is the case with domestic consumers and small-scale industry owners.

Situation has so worsened that many of the small industrial units are putting down shutters throwing lakhs of workers out of job. The middle class and lower middle class families are compelled to reduce their consumption level. Worst casualties are the small farmers using shallow pumps for irrigation. It is proving to be out of their bounds.

In West Bengal, the BORO cultivation that provides rice and cereal to most of the households is almost on the verge of being abandoned. While there is descending darkness on the life of the toiling people, the posh buildings, sprawling shopping malls, amusement parks, gorgeous neon sign displays are dazzling with rare audacity. The contrast is so vivid, so shameless. Naturally, there is mounting discontent and seething rage against such unusual spurt in tariff and acute scarcity throughout the country. But the state government is ruthless in crushing any agitation in protest.

Why this crisis– 

But what has caused such a situation? After independence, the power, as an essential service, was placed under public sector. This sector, it may be mentioned, had been functioning in a “vertically integrated” way which means that the generation, transmission and distribution were handled by one or a few closely connected government organizations.

The closely integrated operation of the three sectors was envisioned to ensure that all major decisions are taken with the overall benefits of the power system in view. Since some technical requirement specific to power sector must be complied with to ensure a smooth operation, the power generated at any moment has to be distributed and consumed at the same time and any imbalance would result in frequency and voltage fluctuations detrimental to the interest of the consumers.

All the generators connected to the grid system have to be “synchronous” which means that they must rotate at the same speed. Any instability and loss of synchronism would result in complete black out in the affected areas.

It was in this way that the powers sector commenced operation in post-independence India under the aegis of the government. With lot of fanfare, big hydel projects and thermal power units were set up and in every 5 year planning, targets of electrification were being fixed to indicate how serious the government was in reaching out to the common people with bountiful of electricity at affordable price.

Illegal power theft in connivance with corrupt government officials assumed alarming proportion. It obviates to say that such deterioration and degeneration could not take place but for deliberate non-action or acquiescence on the part of the government.

Curiously enough, when things began to drift out of control, the government began to harangue the oft-repeated plea that it could no longer undertake this huge responsibility of production and supply of electricity. Hence, there was exuberant invocation to the private players to enter the scene and operate along with government sectors. Sensing huge profit potential, the big monopoly houses like the Goenkas and others also followed the suite. The government organizations like Calcutta Electric Supply Corporation Ltd. (CESC) were privatized. Obviously these private owners started operating on a commercial basis and the electricity rate chart began spiraling upwards.

Features of The Electricity Act– 

With the adoption of the policy of capitalist globalization liberalization- privatization in early nineties, electricity was no more viewed as an essential service but a commodity of the capitalist market of loot and plunder, desperately seeking new market to earn maximum profit, announced ‘opening up’ of the power sector not only to the domestic capital but even to the foreign imperial capital and Multi-National Corporations. West Bengal Govt and BJP-led NDA government decided to ‘de-regulate’ the power sector completely by replacing the three electricity Acts of 1910, 1948 and 1998, hitherto governing the industry, by a single Act, “The Electricity Act, 2003”. The salient features of the Act may be summarized as under: —

(1) Generation, transmission and distribution of power industry are to be unbundled and vested into three separate companies.

All the State Electricity Boards (SEBs) will be wound up. If any state government does not agree to dismantle the SEB, that SEB in that event, will be treated as a company that must ensure guaranteed profit @ 16% for each of the three sectors based                                      on commercialization ;

(2) Any person/company may construct, maintain or operate a captive generating plant. For this, no license and security is needed;

(3) Determination of power tariff will be on commercial lines based on cost of supply of electricity;

(4) “Cross-subsidy” will be abolished /reduced in phases by the State Electricity Regulatory Commission (SERC);

(5) Along with power tariff, a fixed charge will have to be paid by the consumers;

(6) For any equipment like meter for recording power consumption, the consumers will have to pay additional rent or charges;

(7) Security deposit will have to be kept by the consumer for receiving power supply. Failure to keep the deposit will entail termination of power supply;

(8) Open access or opening up of competition

(9) Power generation along with distribution was in the concurrent list of the Constitution. The Act has vested the authority with the Central Electricity Regulatory Commission (CERC) appointed by the Union Government. Under this central nominated body of CERC will work the state level regulatory Commission (SERC) of different states.

Import of the Act– 

Commercial interests of the different private owner led to a catastrophic situation. Hence, they are slowly unbundling the three areas of generation, transmission and distribution and to start with converting the SEBs into companies so that production and supply of electricity commence on a full fledged commercial basis.

For example, WBSEB, already corporatized, wrote to the Commission for recovering as high as Rs.372 crores through tariff revision. The Commission has agreed to the proposal but advised WBSEB to stagger the increase by 5% in sequence so that there is no ‘shock’ to the consumers.

In other words, the fleecing will be in a softer form so as to get the same gradually acceptable to the consumers as inevitable. Further, with the separation of generation, transmission and distribution and allowing separate private companies to run these areas on their respective commercial motives, the essential synchronization of the three is bound to be severely affected leading to a chaos coupled with excessive tariff structure to be worked out after taking into account the profit factors of each of the areas.

On the other hand, with introduction of sophisticated technology and contract labour system, all private operators as well as SEBs transformed into profit making companies will reduce manpower or outsource jobs. Hence, the tariff will soar sky high while employment in the power sector, hitherto a sizeable one, will be drastically curtailed.

In keeping with the natural social justice of imposing less burden on the poor and the lower end of the economy, the power tariff hitherto was based on a slab system of different rates depending on the accrued income in a calendar year to the consumers and the respective quantum of consumption. Naturally, the middle class households and agricultural consumers using less power and earning much less per annum were being charged less at a lower slab compared to the big consumers and large industrial units consuming much more and requiring High Tension (HT) supply.

Moreover, since cost of supply in the High Tension segment was significantly higher compared to medium and Low Tension segments, proportionate load was added in the higher slab.

But now with the power distribution being opened up to be run on a commercial basis at guaranteed profit, there is a cry from the operators in the sector for uniform tariff across the board meaning thereby that a small domestic consumer of 50 units will be levied the same rate as that of an industrial user of 50,000 units.

Thus the so called “subsidization” by the large consumers in the form of paying higher slab-rate is sought to be recovered from the small consumers in the name of bringing uniformity in the tariff. Obviously, while the big monopolists and industry owners will be given relief by slashing of slab rates at the higher end, the small consumers will have to shoulder huge additional burden of escalated slab rate.

Moreover, to woo the domestic and foreign private capital for investing in the states, the various state governments are now in a mad competition as to who can offer the investors more incentive in various ways including supply of power at concessional rate. What a unique twist to natural justice and equity!

West Bengal Government cannot shy away from this vital sector– 

It once again shows how devastating is the effect of the capitalist globalization on the life and livelihood of the common people. There is rapid deterioration in service quality and power cuts, both scheduled and unscheduled, are becoming phenomenal.

No commitment of minimal supply is being honoured. And with this there is frequent upward revision of the tariff to slay the slain poor consumers. With this so-called deregulation of power sector, the West Bengal government also merrily disowns any responsibility or accountability.

We know that electricity is, so to say, a lever of social development, a vital tool to upgrade the social standard of living. Abundance and extensive use of electricity is therefore a must for the progress of a modern civilized society. Any disruption in either production of electricity commensurate with the growing social need, or its proper supply through appropriate mechanism to every consumer, rural or urban, domestic or individual, agriculture or small-scale unit, any discrimination against or deprivation of any segment of consumer either by design or due to systemic fault will reverse the direction of social development.

It is precisely for this reason that so essential a service like electricity must be under total control of the government which must be accountable to the people for any deficiency, deviation, mishandling or malpractice in this regard. Placing such a livewire service at the disposal of private capital, whose sole motive is to earn maximum profit, is therefore criminal because CESC feels no obligation to the people or society and hence take them for a ride to secure profit maximization. The West Bengal government also, pointing at these private owners, shirk off all its responsibilities. This is the crux of the issue that is the most dangerous.

(1) While the responsibility of power generation, transmission and distribution must vest with the state governments, central government must be accountable for providing the all necessary help, assistance including financial assistance so that common consumers are in no way made to bear the burden of high tariff rate and tormented by scarcity and substandard quality of electric supply. West Bengal government must take full responsibility to ensure that there is no wastage or corruption in the power sector.

(2)Differential slab rates must prevail; In agriculture, power should be made available free unto 3-acres of land holding. Rest of agriculture, must get electricity at Re.0.50 per unit.

(3) The use of diesel/petrol for operating irrigation pumps must be substituted by use of electricity;

(4) Small-scale industries unto 30 HP must be supplied power at Re.1.00 per unit;

(5) Cottage industries must be treated as domestic consumers for billing purpose;

(6) Domestic tariff rate must be rolled back to pre-1998 level.

Soumyo Aich Ray

Soumyo Aich Ray

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