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Electricity Bill 2000


Electricity Bill 2000 boasts about private participation in power sector. The situation in Maharashtra State Electricity Board shows the real intention of multi national companies in power sector. Private distribution companies in Orissa is not yet ready to restore the power supply in cyclone hit rural areas. In Andhra Pradesh power tariff was hiked many fold. So for an average Indian citizen electricity is becoming a costly commodity. So it is our responsibility to resist the betrayers from privatising the power sector.


deal with Enron involves payments guaranteed by MSEB, Govt. of Maharashtra and Govt. of India, which border on the ridiculous. The Republic of India has staked all its assets (including those abroad, save diplomatic and military) as surety for the payments due to Enron by MSEB.

Phase I

In phase I, MSEB has to a pay Enron a fixed and a variable cost for its power. The fixed cost has to be paid even if MSEB draws no power from Enron.

The fixed cost currently for phase I of the project is Rs. 1000 crore annually. Phase I does not bind MSEB to purchase any power.

Phase II

Phase II of the project involves a 'take or pay' contract. Therefore once phase II goes on line, MSEB will be obligated to buy a certain amount of power. The price that MSEB will pay to DPC is indexed to the price of Oil, US and India inflation, Rupee to Dollar conversion, etc. 

At current prices, MSEB will be obligated to pay sums starting at Rs. 7000 crore ($ 1.5 billion) a year each year for the next 20 years. For comparison, the entire annual budget of the state of Maharashtra is Rs. 24,000 Crore ($ 5 billion).


In April 2000, MSEB applied to MERC (Maharashtra Electricity Regulatory Commission) for permission to raise its tariffs, contending that it would otherwise incur annual deficit of Rs. 2000 crore.

Read more stories about this issue

1. Enron shoots bill, MSEB cries help

2. MSEB looks to Centre for lifeline on Dabhol

3. State puts blame on DPC for MSEB's ailment

4. Panel to study Enron impact on MSEB finances

5. Scrapping agreement with Enron will cost MSEB dear


The power, sector, due to various reasons, developed many ills, as a consequence of deliberate violation of existing laws and statutes by concerned authorities. Being the most important, vital infrastructure in the country, the "reform" of this core sector is essential. It has become necessary to address the poor financial health of the State Electricity Boards, the organisation responsible for generating and distributing electricity in almost the entire country. The viability of the whole industry is questionable today the result of which is the sufferings of the consumers. Although, Government of India made an attempt to address such problems incorporating qualitative change in legislation, The Electricity Bill 2000 drafted for that purpose, however, could not come out as a comprehensive document, competent of repealing the earlier Indian Electricity Act, 1910 and Electric Supply Act, 1948. This is a common understanding of the discussion held at workshop at Calcutta during 22-23drd May, 2000, organised jointly by Forum of Scientists, Engineers and Technologists (FOSET) and West Bengal State Centre of the Institution of Engineers (India).

The Bill has been prepared by National Council of Applied Economic Research, not known for having expertise and specialisation on Power Sector. Power Sector being an exclusively specialised subject, not a typical consumer item, can’t be dealt with but experts from technical and legal streams, which are not in dearth in the country. India is a nation having successfully installed 90,000 MW (among largest 10 nations in the world), has though this process created a host of experts of International Standard within the country who could have been taken into confidence, while preparing such draft, instead of making a hasty formulation, suspiciously imitating some unproven trendy solutions, being experimented in a few developed nations. Releasing continuous editions (five till date) along with changing of sequence of the chapters of the draft within two months time, only substantiate this statement. Moreover, the changing of sequence of chapters in the successive edition created lot of confusion.

Any legislation in this core sector should aim for reaching the people at large with electricity. Any rationality in the process would ask for objective analysis of the past bills and acts and inclusion of the time tested provisions of earlier regulations. Unfortunately this is missing in the draft bill. Objectively it is to be clarified clearly whether the draft bill – 2000 will aim at consolidation of existing consumers already connected, or to reach power to 350 million poor Indians, who are yet to be supplied with electricity. Electricity is no longer an optional item, it has become an entitlement. It is critical to industry, agriculture, health, education etc. No doubt it has contributed largely in attaining the food sufficiency during sixties and seventies.

The earlier bills / drafts were prepared to achieve:

  • Provide power at affordable rates to all classes of consumers, as a consequence of which principles of cross subsidization was introduced.

  • Reach electricity to economically disadvantaged section including rural through intensive Rural Electrification Programme.

  • Electricity was made the backbone for food security through irrigation pump sets.

  • Power to support colossal growth of industry, railways and communication.

  • Encourage building up self-reliance by judicious tapping of indigenous resource like using high ash coals available indigenously rather than imported fuels.

  • Ensuring regional balance and establish co-operation and participatory control through Regional Electricity Boards and RLDC keeping harmony between states and the centre.

Unfortunately the Bill 2000 did not deal with objective analysis although it appears that the draft is aimed for creating conducive legislation for private/foreign investment and restructuring the State Electricity Boards. It is not clear, how mere restructuring will solve the fundamental problems, if the attitude and will are not changed; The World Bank Officials directly designed and initiated the legislative and structural changes in the state of Orissa. The same model is being repeated in Haryana and Andhra Pradesh, without having any real life stock taking of Orissa scenario today. Once privatised, the super cyclone hit large areas are still debarred of electricity (after eight months). The company has asked for compensation of Rs.300 crores as precondition of restoring the distribution network in rural areas and it is said that without rural consumers at present, they are enjoying commercially better consumers with and as a natural consequence, they are reluctant to reconnect the rural load. The state Regulatory Commission could not ensure supply for entire rural people, who are certainly not at a fault for such uncertainties and misuses. No analysis of such reforms was made in the objective of the bill 2000. Ironically, while unbundling of SEBs has been proposed no such structural changes have been proposed for the vertically integrated private licensees, e.g. TEC, BSES, CESC, AES. In subsequent edition, it has been mentioned, without giving any justification that, states are however, at liberty to decide on restructuring of SEBs. This will lead to confusion and inconsistencies.

The following socially purposeful areas, well defined in earlier bills, are missing in this draft,

  • Reasonable return to licensees

  • Only proper expenditure allowed to licensee

  • Straight line method of depreciation

  • Role of inspectors as a link between consumer and the license

  • Formulation of new schemes and methodology of their sanction.

Over and above, salient technical aspects are missing in the draft, e.g. safety regulation, voltage stipulation, frequency standards, condition of supply provisions of supply along with necessary obligations, definitions e.g. MW, MVAR, MVA, PF, harmonious etc.) The vital aspects like energy audit conservation, harnessing renewable energy sources, energy management, energy efficiency have not been touched upon. Even it has not kept obligatory provisions, on the part of the utilities to supply electricity, to the people, who will apply fulfilling the necessary formalities.

CEA’s power of arbitration on technical matters and scrutinization of new proposals have been withdrawn and the same has been rested on Regulatory Commission. CEA, being constituted as an Advisory body for Ministry of Power, has got experience expertise and infrastructure for carrying out the above functions. CEA is past three years has succeeded in bringing down the cost of private sector power projects by Rs.6000 crores, which was otherwise been allotted to the private entrepreneurs through MoU route. CEA had functions as regulator, advisor and innovator and sometime as consultant. CEA is organised in such a manner that there is complimentarily between the various functions and responsibilities. How can an independent regulator, not even accountable to the Ministry or Parliament replace such a proven system. The role and authority of SERC vis a vis CERC and/or state government is also not clear in the draft. The power of the state government to given direction to the Regulatory Commission (SERC), even on matters of policy involving public interest is eliminated. In case SERC; Straightway rejects these directions, state government has to made appeal to CEREC this undoubtedly is a dilution of the authority of state government with respect to the constitutional power entrusted for this subject of concurrence. Moreover, there is no mention whether the Regulatory Commission can reopen the PPA’s already executed with Independent Power Producers, resulting in no control over tariff or power production from those plants.


Considering all these aspects, deliberated threadbare in the workshop, it was resolved that:

The Draft Bill 2000 in its present form will neither serve the purpose of supplying quality power at reasonable rate, nor it appears to be able to address the cronic decease in national power sector.

The earlier two Acts 1910, 1948 has served the nation well during last five decades although there might have been reasons for incorporating certain amendments in order to overcome the immediate difficulties faced in present scenario. There are certain provisions in the Draft Electricity Bill 2000, which can be incorporated through amendment of the existing bills.

The workshop requested the Ministry of Power to bring out with a white paper on experience of reform carried out at state level (e.g. Orissa, Haryana, Andhra Pradesh etc.) and at national level. This will help analyzing the present status more objectively.

The workshop also suggested to form a national level commission to examine the existing laws/acts and to suggest necessary amendments. The commission should include eminent experts/professionals of national repute representing private sector. PSU, Chamber of Commerces, SEBs, and professional associations.

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