Jan Sangharsh Morcha Press Release
  14 December 2004
Save The Narmada, Save Humanity!

Asia Development Bank and British Government train guns on small and marginal farmers, poor domestic consumers of Madhya Pradesh : State government must roll back tariff to 2000-2001 rates

Nimad Malwa Kisan Mazdoor Sangathan
Jail Road, Mandleshwar
District Khargone, Madhya Pradesh
Tel: (0) 9425087827, (0) 9425056802
Email: nobigdam@sancharnet.in

No new ADB power sector loan and DFID TA to be accepted, British government funded consultants must go.

By drastically increasing the power tariffs for 3 HP and 5 HP pump-sets mainly used by marginal and small farmers in the state, as well as those of the domestic consumers of Madhya Pradesh, through the new tariff order announced by the Madhya Pradesh Electricity Regulatory Commission on the 11th of December 2004, it is has become apparent once more that Asia Development Bank and British Government that is responsible for power crisis in the state for the last three years have now trained their guns on small and marginal farmers and poor domestic consumers of Madhya Pradesh. It has long been clear that the popularly elected state and Central governments have become agents of the corporate privatization agenda of the ADB-WB combine and the British government. This new tariff order will result in 75% of all farmers in the state, 95% of all domestic consumers and almost all single-point consumers being disconnected as a result of their inability to pay. The loss of electricity for irrigation signals pauperization and death for these lakhs of farmers already struggling with markets flooded with cheap imports, drought and debt, will deepen agrarian distress and lead to farmer's suicides. This new tariff order will also lead to millions of domestic consumers having to choose darkness to paying prohibitory expensive electricity bills. It may be noted that cost of electricity in Madhya Pradesh is one of the highest in the country although the state has one of the lowest per capita incomes.

The Jan Sangharsh Morcha that is the forum of 15 organisations all over Madhya Pradesh and Chattisgarh and the Nimad Malwa Kisan Mazdoor Sangathan both organizations committed to fighting imperialism, and for farmers and common people's rights condemn this new tariff order and call on the state government to untangle itself from the grips of the multilateral banks and the British Government, and roll back the agricultural and domestic electricity tariffs to 2000-2001 rates in the interest of national self-reliance in food and agricultural production, and for the survival of the peasantry, and the electricity needs of the domestic consumers. The Jan Sangharsh Morcha and the Nimad Malwa Kisan Mazdoor Sangathan also call on the Central and state government and the people of Madhya Pradesh to immediately scrap the Electricity Reforms Act 2001, dismantle the MPERC, set up a democratic and politically accountable body to take decisions about the power sector, and stop the anti-people and anti-farmer unbundling and privatization process. If the people of Madhya Pradesh want sufficient and affordable power, and want to reclaim the power sector from the hands of global corporates and foreign governments, they must begin by ensuring that all international consultants to the state power sector institutions, such as the SNC Lavalin, the KPMG and the Price WaterHouse be immediately dismissed and that the state government not be allowed to take a further 300 million US dollars loan and grant of 13.5 million pounds for further consultancy support from the British government which are in the pipeline.

Targeting the poorest majority

The new rates announced by the MPERC will increase by 21% - the existing power tariffs for farmers with pump-sets up to 3 HP, who constitute 50 %, that is half of all agricultural power consumers in the state. It also implies an increase in tariff for farmers up to 5 HP ^÷ who constitute 26 % of all agricultural power consumers in the state. Thus power tariffs have been increased for 75 % of all agricultural consumers. Moreover, the new tariff order offers no tariff relief at all to those with pump-sets between 5 to 10 HP who constitute 3.5 % of the consumers in the state, and a only very tiny roll-back of 6 % for farmers with pump-sets over 10 HP numbering 2759 in all, and representing 0.24 % of the agricultural power consumers.

For domestic consumers, the increase in tariffs is the largest (68% - 132%) for the category of obviously poor consumers using between 0-50 units of electricity and who constitute 95 % of all LT consumers. For the 8.18 lakh single point consumers in the state, struggling for their very existence, the MPSERC has further increased their tariff by 15% from Rs. 1.80 to Rs. 2.10 per unit. This increase in tariff, completely unaffordable for any single point consumer family will push them to disconnection and darkness. Yet the increased tariff constitutes a mere Rs. 10.31 crores savings for MPSEB !!! Obviously, the extent of the saving is unimportant. To use the tariff broom extensively is.
Clearly, the strategy is to push out of the grid the poorest agricultural, domestic and single-point consumers who also constitute the majority, in order to consolidate the electricity market, and make it potentially profitable. As long the poor were regarded as citizens and human beings for whom electricity and water were human needs and rights, it was a national objective of the state to ensure that the farmers, common people and poor consumers were all provided sufficient and affordable electricity. However with the current takeover of the national goals by the corporate agenda of the ADB and the British government, and the attempts towards the transformation of the power sector from a service sector to an electricity market, it has now become necessary to weed out the poor consumers and the farmers who have become unsavory obstructions in the path of profit and business opportunities. It is in this context that tariff hikes to be followed by mass electricity disconnections will be used as an important weapon to consolidate the power sector as a market. A compliant MPERC is a part of the agenda and the machinery of the global corporates.

In the back drop of the 2002 tariff shock

The new rates must be seen in the backdrop of the December 2002 MPERC order to increase the electricity tariffs for the farmers of Madhya Pradesh by 600%. As a consequence, there were massive disconnections as farmers were unable to pay hugely inflated electricity bills. The White Paper of the Madhya Pradesh government of June 2003 states that 50% of all agricultural connections in the state (6 lakh connections out of 12 lakh connections) were disconnected. Moreover, the entire agricultural sector in the country is facing sharply escalating agricultural crisis in the country due to the WTO regime. Since 2002, farmers all over the state have consistently fought against this crippling tariff hike and had asked for a roll-back to 2000-2001 rates.

It was in recognition of this deep agrarian distress that prior to the Vidhan Sabha elections in December 2003, the previous Madhya Pradesh government took a decision to make power for all agricultural consumers below 5 HP free, a decision that was subsequently upheld by the ruling state government. This decision led to the state subsidizing all bills of agricultural consumers up to 5 HP from January 2001 to December 2003. The electricity connections have been reconnected as a result of the government decision to pay the bills, but in the last two years, the unpaid bills in the LT consumers has increased from Rs. 82 crores in 2002 to over Rs. 1100 crores now, hiding a tariff shock of mammoth proportions and signaling that there is a systemic inability to pay by LT and agricultural consumers. The question is why there is no concern for the small and marginal farmers now.

Clearly, nothing has changed in the last one year. The agricultural sector continues to remain in crisis. Cheaper and subsidized imports of agricultural commodities from developing nations have led to a fall in the prices of agricultural commodities along with more expensive seeds, pesticides, fertilizers, huge debt burdens and agricultural deficits instead of surpluses. The Nimad Malwa Kisan Mazdoor Sangathan had conducted a study of farming economics and had argued in front of the MPERC that agricultural tariffs must be decreased due to lack of paying capacity. Yet, instead of a substantial roll≠back the tariffs for the majority has been increased massively. On target is not only the power sector but also Indian agriculture.


In 1999, a condition of a Rs. 1200 crore ADB loan for "Madhya Pradesh Public Resource Management Programme" required the creation of an "independent" Electricity Regulatory Commission, insulated from the realm of public control and accountability, to take decisions about the power sector. What followed in the name of "independence" and "reforms" was a complete take-over of the Madhya Pradesh power sector. The Energy Reforms Act 2000 was pushed through, and the Madhya Pradesh Electricity Regulatory Commission set up, in order that the state government could no longer be held accountable by the people of Madhya Pradesh for electricity related decisions. Thus decisions about the generation, tariffs and outlays for the electricity sector were removed from popular control. Meanwhile, the overseas development wing of the British government called the Department for International Development (DFID), stepped in with a grant of Rs. 10 million pounds, and appointed three multinational firms to serve as consultants for all the three major power-related institutions in Madhya Pradesh.

The multinational accounting firm - PricewaterhouseCoopers is being paid by British government to work with the Madhya Pradesh Electricity Regulatory Commission. Another multinational firm - KPMG-IPA is being paid by the British government to work with the Madhya Pradesh Energy Department, and SNC Lavalin, a Canadian consultancy firm is being paid to be the consultant for the State Electricity Board. In fact the SNC Lavalin has the responsibility for determining the electricity generation and availability plans for Madhya Pradesh for the last three years. In fact, these agencies in their documents have confirmed that the MPERC relied heavily on consultants to develop systems and processes. It is not a matter of surprise that this heavy reliance on the British government funded PriceWater House consultancy group has led the MPERC to hike the electricity tariffs in a manner, so that the poorest majority are thrown out of the grid altogether.

Today all decisions related to power is being taken at the behest of the British government and the ADB by these consultancy firms. It is to these multinational firms who are in charge that the extensive black-outs and power crisis throughout the state must be credited. This, despite the fact that the sum of the total power generated in the State and the power available from the Central pool as Madhya Pradesh's share exceeds the electricity demand in the State by a comfortable factor. Similarly, the lack of improvement in efficiency parameters and and the continued loss of almost 50% of all generated and purchased electricity must be placed squarely at their door. The people of this state and indeed this country must also hold responsible the Indian and state governments for becoming agents of the global corporations while keeping their democratic masks intact. The struggle for power, livelihoods, national sovereignty and democracy must begin by tearing off these masks.

Chittaroopa Palit - Jan Sangharsh Morcha
Vijaybhai - Jan Sangharsh Morcha
Suresh Patidar - Nimad Malwa Kisan Mazdoor Sangathan