The above is article from Indian Express. Govt. is planning | ECONOMY by VIVEK SINGH

The above is article from Indian Express.

Govt. is planning to amend the "Electricity Act 2003" through "Electricity Amendment Bill 2021". Electricity is "concurrent" subject but in India, the "Power Distribution" sector is mostly in the control of State Govt.s through their "DISCOMS" which are basically State PSUs. Only Delhi, Mumbai and 2/3 cities have privatized their Discoms. Most of the DISCOMS (State PSUs) are in huge loss and time to time Central Govt. has brought in Schemes and supported these DISCOMs out of their financial mess but it has not resulted in any viable long term solution. And after every few years these DISCOMs seek support from the Govt. That is why Central Govt. is planning to bring the following amendments in the Electricity Act 2003 to introduce the changes at the all India level:

1) Delicense the power distribution sector and allow private DISCOMs: It will result in competition and more efficiency and reduction in tariffs - But few States are continuing their same old cry and are against privatization. States are saying that Private distribution companies will "cherry-pick" only good areas with more industrial and commercial consumers and not residential and rural consumers. — This can be resolved by structuring the project in proper way.

2) Right now Industrial and Commercial user "Cross-subsidize" the residential and agricultural consumers which means tariff for commercial and industrial consumers is high and that money is used to provide cheaper electricity to residential and agricultural consumers. States fear that if private sector is allowed then cross-subsidy may be removed.

3) Bill increases penalty for DISCOMs that fail to meet renewable Power Purchase Obligations (RPO). Let me explain. Presently every DISCOM is given a target to purchase renewable energy out of its total purchase of electricity and State DISCOMs have failed in that. So, States fear that this penalty will hurt them.
For more detail on RPOs pls see this link https://t.me/VivekSingh_Economy/1683