Govt Drops Plan To Provide Choice of Electricity Suppliers to Consumers
Consumers waiting for the big bang distribution sector reforms that would have allowed them to choose electricity suppliers offering the lowest tariff are in for a big disappointment.
 
The government has dropped the plan to break the monopoly of discoms by bringing in competition and has rather decided to focus on introducing a direct benefit transfer scheme (DBT) as the next wave of reforms in the power sector.
 
Minister of state for power RK Singh told IANS that the plan for separation of carriage and content operations in the distribution segment that would have allowed multiple discoms in one area has been dropped for now and may be covered as part of the next leg of reforms sometime in the future.
 
"The plan for ushering in competition in the distribution segment has not been covered now. It may happen sometime down the road not now, maybe in the next leg of reforms," Mr Singh said indicating that the states are still not ready for it and have cited infrastructure shortcomings for not supporting this reform agenda.
 
The Electricity Act, 2003, laid the foundation for introducing competition at the consumer end of electricity supply through open access and provision for parallel distribution licensees. However both these concepts saw limited success in the Indian electricity sector. The process was fine-tuned in the Electricity Amendment Bill by proposing separation of carriage and content operations in power distribution and allowing multiple players in a distribution area.
 
The latest Electricity Amendment Bill, which is being vetted by the law ministry, has dropped the provision that would have allowed a choice of power discoms to consumers with usage of even less than 1 MW.
 
"This (non inclusion of distribution sector reform) would be injustice to consumers who were expecting competitive electricity tariff to set in as soon as possible. The mechanism would have worked to the advantage of consumers now with prevailing lower fuel prices and the country having surplus power capacity. This could have helped consumers to get electricity at much lower rates than what is being offered for supplies made by inefficient state electricity boards," said an energy sector analyst who did not wish to be named.
 
At present only large customers using more than 1 MW have the permission to choose a supplier under open access regulations. The new legislation would have offered this choice even to retail customers thereby removing the restriction of one discom per circle and allowing multiple suppliers to compete to offer the cheapest and best services to electricity consumers.
 
Apart from reluctance to shed discom monopoly, states are not ready for this reform that would require a massive infrastructure and regulatory revamp. Moreover, with more than one supplier in circle and active private sector participation, states fear that sudden changes could lead to the bulk of state discoms prized commercial consumers moving to more efficient private ones. This could result in further stress for loss making discoms.
 
Sources said that inclusion of DBT itself has been a challenge and required a lot of convincing to bring states on board. "May be five years would be given to states to bring down cross subsidy surcharge and perfect DBT structure before unleashing competition in the distribution sector," said the source.
 
However, to ensure that discoms take to loss reduction trajectory, the power ministry has proposed a funding mechanism where disbursals would be made against specific loss reduction targets by state-owned funding agencies PFC (Power Finance Corporation)  and REC (Rural Electrification Corporation).
 
The amendments in the Act proposed earlier suggested segregating the carriage (distribution network) from the content (electricity supply business) in the power sector. The government would introduce multiple supply licensees in the content business based on market principles and continue carriage as a regulated business.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    parimalshah1

    2 months ago

    the babus want to have their slice of cake.
    A prepaid meter system will get rid of those who steal electric power at the cost of discoms (and hence make other consumers pay for that loss) is in the norm today. The discoms pass that theft as Distribution and transmission loss!

    Govt Eliminates Cooking Gas Subsidy as COVID Turns Oil Market Favourable
    The government has completely eliminated the need to provide subsidy on domestic cooking gas as the global fall in oil prices and frequent rise in LPG gas cylinder price has brought the price of the common man's fuel closer to market rates.
     
    As of 1st September, the price of non-subsidised and subsidised 14.2 kg cooking gas is identical at Rs594 a cylinder. What this means is that government would no longer need to pay subsidy under the direct benefit transfer scheme (DBT) into the account of beneficiaries.
     
    In fact, with the price gap between the subsidised and non-subsidised cooking gas narrowing since early this fiscal, the government has not made a any cash transfers into the accounts of beneficiaries for the last four months.
     
    With the development, the government could easily make a saving of over Rs20,000 crore in FY20-21 towards LPG subsidy. This would be huge given the pressure on the government to step up expenditure for COVID-19 relief schemes.
     
    The government has allocated Rs40,915 crore as petroleum subsidy for FY20-21, a 6% increase from Rs 38,569 crore allocated for the last fiscal. Out of this,the allocation for LPG subsidy has been increased to Rs37,256.21 crore for the current year. But so far in the first quarter period, the government had to draw just about Rs1,900 crore from the subsidy provisions.
     
    While global oil markets are largely responsible for the fall in the prices of all petroleum products, but oil companies also raised the price of subsidised cooking gas consistently from a level of Rs494.35 a cylinder in July last year to Rs 594 now. Had this increase not taken place, the 14.2 kg domestic LPG cylinder price would have been more than Rs100 cheaper.
     
    According to an analysis done by Emkay Global, oil companies' under recovery in case of kerosene has come to a naught since March while that for LPG has become zero from May.
     
    India has about 27.76 crore LPG consumers. Of these, around 1.5 crore are not eligible to get LPG subsidy since December 2016 because they have an annual taxable income above Rs 10 lakh.
     
    This leaves some 26.12 crore consumers who were eligible to get the subsidy relief under the DBT scheme. Out of this lot as well, with the latest developments 18 crore are not receiving any subsidy.
     
    The government is now focusing on providing relief only to the poor and an amount of Rs9,709.86 crore has been transfered into the accounts of about 8 crore such beneficiaries who are to take three free LPG cylinders during the COVID pandemic.
     
    The good news is that with the developments in the past few months, the government had completely eliminated oil subsidy and is spending the savings on other welfare activities. But this could mean that if there is any spike in LPG prices hereon, the government may pass on a portion of the burden to consumers by raising LPG prices.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    komalhema4

    2 months ago

    Lame excuses for denying benefits to common man. The free gas cylinders given to poor people are sold by them to hotels .They continue to burn fire wood brought free from forests.
    Why is it that petrol diesel prices are not reduced or not brought under GST. One nation one tax is in more bogus slogan. There are two rates of income tax also..

    BR

    2 months ago

    Congress Govt kept Illegal Bangladeshis in India for its benefits like votes. They got govt to jobs too, ration cards, employment Exchange regn, etc. Now Rohingyas eat us. They must go back or to Bangladesh. Why must we bear cost of keeping these vermin . Govt gets benefits. It built Statue of Unity with our tax money. It levies GST on Canned Drinking Water. We Pay Rs40/50 for 20 Litres. Supplier pays GST heavily for lorry load. Electronic devices are forced on poor & rich. To get Ration card we must use Cellph. Many jobs are made only Online. So we must use Internet in Browsing shops or our own or borrowed costly devices. Repairs are costly. GST is on all & on systems, Telecomm, etc. All ready made foods like bread, bun, biscuit, etc., are taxed. We buy them to avoid cooking food to save LPG as Govt wants to give it to poor. In return it should exempt these foods from GST. We can then but more such foods & reduce LPG use. We are unduly taxed. GST must be removed from these.

    shadikatyal

    2 months ago

    The fact is that many poor people ere given LP gas are not buying it anymore as prices have gone up. The question is that despite Modi claiming it for the poor, it has not helped but good for vote-getting. Unfortunately figures of Crores but how much is truly spent or subsidised .
    The question is is the nation better off and are people aew better off

    Flat-buyers Entitled to Compensation for Delayed Possession: SC
    The Supreme Court on Monday said the flat-buyers are entitled to compensation for delayed handing over of possession and for the failure of the developer to fulfil the representations made to them in connection with the provision of amenities.
     
    The top court noted that it cannot be oblivious to the one-sided nature of agreements drafted to protect the interest of the developer.
     
    A bench comprising Justices DY Chandrachud and KM Joseph said a failure of the developer to comply with the contractual obligation to provide the flat within a contractually stipulated period amounts to a deficiency. "To uphold the contention of the developer that the flat buyer is constrained by the terms of the agreed rate, irrespective of the nature or extent of delay would result in a miscarriage of justice," it observed.
     
    The bench noted that the flat purchasers suffer agony and harassment, as a result of the default of the developer. "Flat purchasers make legitimate assessments in regard to the future course of their lives based on the flat which has been purchased being available for use and occupation. These legitimate expectations are belied when the developer, as in the present case, is guilty of a delay of years in the fulfilment of a contractual obligation," it said.
     
    The judgement of the top court came in a matter where the National Consumer Disputes Redressal Commission, declined to entertain a consumer complaint by 339 flat-buyers, and accepted the defence of DLF Southern Homes Pvt Ltd and Annabel Builders and Developers Pvt Ltd that there was no deficiency of service on their part in complying with their contractual obligations and that, despite a delay in handing over the possession of the residential flats, the purchasers were not entitled to compensation in excess of what was stipulated in the apartment buyers agreement.
     
    The top court did not agree with this approach in the case, saying that intrinsic to the jurisdiction which has been conferred to direct the removal of a deficiency in service is the provision of compensation as a measure of restitution to a flat-buyer for the delay which has been occasioned by the developer beyond the period within which possession was to be handed over to the purchaser. 
     
    The counsel for flat-owners contended before the top court that there was a gross delay ranging between two and four years in handing over possession and the flat-buyers ought not to be constrained by the terms of the agreement which are one-sided and unreasonable.
     
    Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.
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    COMMENTS

    vswaminathan

    2 months ago

    As regards some of the other inter-connected but not so-obvious angles of common concern, suggest to look up, apart from the earlier Posts on the very same topic, the recent Posts @
    < https://www.facebook.com/swaminathanv3/posts/3231526050256992
    < https://www.linkedin.com/in/vswaminathan13/detail/recent-activity/

    courtesy

    rajoluramam

    2 months ago

    What is the position of RERA in our country? How many states have implemrnted and formed the regulations? Whether the states appointed the Chairman and members of the implementing aythority? Under this, where the DHFL, ANIL'S RELIANCE HOUSING ETC stands. Whether any builder was prosecuted and brought justice to the flat purchasers. No doubt there are plethora of laws, Rules and regulations for Flat purchasers. But only problem is implemantation




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