Maharashtra's State-Run Power Firms Won't Be Privatised, MSEDCL Share Sale In Offing: Fadnavis

Maharashtra's three state-run power companies -- Mahatransco, MSEDCL or Mahavitaran and Mahagenco -- would not be privatised under any circumstances, Chief Minister Devendra Fadnavis said on Wednesday.

The government's main objective was to make the Maharashtra State Electricity Distribution Company Ltd (MSEDCL) debt-free, improve its efficiency and provide better services to consumers, he said.

MSEDCL currently has a debt burden of around ₹80,000 crore, resulting in a heavy interest burden on the company. The government has already approved MSEDCL's restructuring and important steps are being taken towards bringing an initial public offering (IPO) of the company, the CM said.

"The three state power companies (Mahatransco, MSEDCL and Mahagenco) would not be privatised under any circumstances," Fadnavis said at a meeting with representatives of the Maharashtra State Electricity Employees, Engineers and Officers Action Committee at Sahyadri Guest House here.

The three state-owned corporate entities, handling power generation, distribution and transmission, were formed after restructuring of the erstwhile Maharashtra State Electricity Board (MSEB) in 2005.

According to an official release, Fadnavis said the government was working to resolve pending issues concerning employees of the state power firms, including appointments on compassionate grounds, within the legal and administrative framework.

He stated that a committee would be set up to study the "Haryana pattern" for ensuring social and economic security of contractual workers.

"The government's objective was to make MSEDCL debt-free. Reducing the debt burden will strengthen the company financially and help it use its resources more effectively to provide better services to consumers," he said.

Fadnavis maintained the state had opposed parallel licencing in the power distribution segment and stressed the need to strengthen government-owned energy companies so that they could compete with their private sector counterparts.

The government was keeping various options open for improving distribution systems and efficiency of state-owned power companies, the CM noted.

Referring to franchise models, Fadnavis insisted franchising should not be equated with privatisation and added the model had shown positive results in areas such as Bhiwandi, Mumbra (Thane district) and Malegaon (Nashik district).

Power distribution losses in Malegaon, which were earlier more than 50 per cent, had come down to 36 per cent, he told the meeting.

The government may consider the franchise model in a limited manner in specific areas to address long-standing problems, Fadnavis stated.

Maharashtra would require an additional power generation capacity of around 20,000 MW over the next five years and steps were being taken to meet the anticipated demand, he said.

"If the MSEDCL IPO comes to the share market, it will be the first IPO by a government-owned power distribution company in the country," he said.

The IPO is part of the process of strengthening MSEDCL's financial position, he said, adding the restructuring would strengthen its balance sheet and help raise funds to manage liabilities of around ₹33,000 crore.

The IPO is expected to bring greater transparency, financial discipline and efficiency to the company and create new opportunities for investment in the power distribution sector, Fadnavis said.

A meeting of the board of directors of MSEB Holding Company, chaired by Fadnavis, discussed MSEDCL's restructuring, financial strengthening, IPO preparations, appointments and future reforms.

The meeting also discussed appointments to the posts of director (finance) and regional directors in MSEDCL, besides appointments to various posts in MSEB Solar Agro Power Ltd.