The Centre has approved the draft of Amendment Bill, 2020 to effect major reforms in the sector, and plans to extend DBT to the power sector to make benefits more targeted towards the poorer sections of society.
The Ministry of Power proposes introducing Direct Benefit Tariffing (DBT) in the sector, in which electricity tariffs will be determined by commissions without taking into account government subsidies, which will be directly given to the intended consumers.
The draft Bill to replace the Electricity Act of 2003 was made public on Saturday and will be open for public comment for the next 21 days. The ministry will then move a Cabinet note on the Bill before presenting it to Parliament for final approval during the upcoming session.
Once implemented, the DBT system in the power sector would not only relieve state governments of their power subsidy burden, but would also help to lower electricity tariffs by reducing cross-subsidy surcharges dramatically.
At the moment, state governments subsidise all household electricity tariffs by keeping commercial and industrial tariffs higher. As a result, commercial tariffs have remained nearly twice as high as those set for households between Rs 6 and Rs 8 per unit, affecting business activities and economic growth.
The new bill aims to stop industrial and commercial customers from subsidising domestic and agricultural customers’ electricity bills.
Electricity bills for the poor would be reduced by transferring subsidies directly into beneficiary consumers’ accounts via the DBT platform.
The new bill aims to prevent industrial and commercial customers from subsidising the electricity bills of domestic and agricultural customers.
Subsidies would be transferred directly into beneficiary consumers’ accounts via the DBT platform, lowering electricity bills for the poor.