MSEDCL proposal to recover unpaid power bills comes as shock to farmers

Print edition : December 03, 2021

Members of the Rayat Kranti Shetkari Sangathan at a rally demanding Fair and Remunerative Price for sugarcane, in Karad, Maharashtra, on November 1. In order to recover electricity dues, the Maharashtra State Electricity Distribution Company Limited has asked sugar mills to deduct the amount from the payment they make to the sugarcane growers. Photo: PTI

The Maharashtra State Electricity Distribution Company’s unconventional proposal to get sugar mills to recover around Rs.41,000 crore in unpaid power bills of farmers raises eyebrows.

The sugarcane industry in Maharashtra has just been delivered a googly by the Maharashtra State Electricity Distribution Company Limited (MSEDCL). Faced with a surge in the number of defaulters, the MSEDCL is adopting unconventional methods to recover unpaid power bills of about Rs.41,000 crore from the agriculture sector; Rs.10,000 crore of this is from about 12 lakh sugarcane farmers.

In a nutshell, to recover its dues it has asked sugar mills to deduct the amount from the payment they make to the sugarcane growers. Although touted as voluntary, the plan has raised eyebrows. The MSEDCL has even offered sugar mills 10 per cent of the recovered amount as reward. This offer was made to the mills at a recent online meeting between the MSEDCL, the Sugar Commissioner, sugar mill directors and managers of mills in Solapur, Pune, Kolhapur, Satara and Sangli.

The mills, however, are in no hurry to comply with the MSEDCL’s wishes, and they have a valid reason for that. Mills are supposed to pay the Fair and Remunerative Price (FRP) that is set for sugarcane growers, and apparently they have no say in the matter. The MSEDCL is pushing its case by pointing out that mills often deduct crop loan dues from the amount they pay cane growers. However, that is done only after farmers give their written consent. The mills generally are hesitant to get involved in this unorthodox method of retrieving dues.

While it is true that farmers have run up huge arrears in electricity bills, it is pertinent to ask why the MSEDCL is not chasing the defaulters directly.

Victims of state policy

The other side of the argument is that to some extent the MSEDCL is also a victim of state policy. On November 19, 2020, the Maharashtra Cabinet cleared a proposal for a one-time settlement scheme for farmers’ unpaid power dues. It was part of the election promise made by all three parties—the Shiv Sena, the Nationalist Congress Party and the Congress—that make up the Maha Vikas Aghadi. The amnesty scheme was expected to recover Rs.41,000 crore in farmers’ unpaid electricity bills for running agricultural pumpsets. The government said it would waive the interest and penalty and provide a rebate as well on the actual amount pending prior to 2015. The State also announced it would provide two lakh new connections by the end of 2022 and eight hours of power supply to all farmers within three years. A budget of Rs.1,500 crore has been earmarked for these plans.

When the issue of arrears against bills for operating agricultural pumpsets was discussed in the Cabinet meeting, Ministers were informed that the MSEDCL was yet to recover dues on this count for the last two years and that the amount had risen to around Rs.41,000 crore.

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Figures show that only about 8 per cent of farmers pay their electricity bills regularly. Many delay payments in the hope of benefiting from amnesty schemes that are announced from time to time. A State energy department official described the situation as “a vicious circle” and “self-defeating”. He said the arrears mounted to about Rs.6,000 crore every year. Realising that it was practically impossible to retrieve this money, the State declared the amnesty scheme.

Under the November 2020 scheme, for bills pending after 2015, the penalty would be waived, but half of the interest would have to be paid. Rebates of 100 per cent, 30 per cent and 20 per cent were to be granted to those who paid their pending bills in the first, second and third year, respectively, after the declaration of the scheme.

The government scheme seems to be well thought out in that most of the recovered money is ploughed back into rural welfare. As much as 33 per cent of it is to go to the gram panchayat, which has to utilise it to improve the local electricity network. Another 33 per cent is to go to the district administration for the same purpose. The remaining 34 per cent will go to the State government to enable it to purchase power. Keeping the money for local circulation is meant to be an incentive not only for farmers to pay up but also for local gram panchayats to persuade farmers to clear their dues.

Huge deficit

But the plan does not seem to have translated into reality as is apparent from the huge deficit of Rs.41,000 crore. The sugar mills are aware of the problems this creates for the MSEDCL but have so far stood firm and ask as to which law requires them to deduct the dues from what they pay farmers.

Farmers are furious at the MSEDCL’s decision to use the Sugar Commissionerate and mill owners to extract dues. Farmer leader Raju Shetti has joined the fray and opposed the proposal. He and the mill owners are on the same side of the fence, which is a highly unusual situation.

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Raju Shetti is an old warhorse who has been fighting for farmers’ rights since his days in Maharashtra’s Shetkari Sanghatana, an organisation formed by the late Sharad Joshi that has successfully represented farmers on issues of electricity, irrigation, pricing, and so on. After Shetti broke away from the Sanghatana he formed his own political party, Swabhimani Paksh, which has a wing called the Swabhimani Shetkari Sanghatana (SSS). His political party formed an alliance with the Bharatiya Janata Party in 2014 and Shetti served two terms as a Member of Parliament from the south Maharashtra constituency of Hatkanangle. The SSS is one of the few active bodies for farmers’ rights and has consistently fought for the rights of cane farmers.

Raju Shetti has warned sugar mills that they have no authority to give anything less than the FRP without the written consent of farmers. He has also raised the issue of faulty power bills that are being issued to farmers.

Clearly something needs to be done on both sides as the stalemate remains: the MSEDCL needs to give accurate bills and farmers need to pay them.

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