MSEDCL may opt for regional franchisee model for power distribution network in State

 

 

 

Maharashtra Government is contemplating reintroduction of franchisee model in power distribution for entire State and base for the same is being laid through the formation of regional companies under Maharashtra State Electricity Distribution Company Limited (MSEDCL). As Dr Nitin Raut, Energy Minister, revealed that four sub-companies, one for each revenue region were being established, there was possibility that same would form the base for future franchisee model, said sources. People in know of the larger scheme, said post division MSEDCL is going to invite bids for each of the regions separately. Each of the regions would be entrusted separately to multiple bidders and it remains to be seen how the company distributes the high earning HT consumer base in one area. Saddled with arrears of Rs 73,879 cr due to non-payment of bills on part of consumers, MSEDCL is struggling financially to keep afloat. On top of that the loans taken during previous regime have added to problem as the repayment Rs 45,550 crore while the earnings are not keeping match due to rising default, especially post COVID-19 wherein citizens’ earnings have taken a big hit. All this has translated into rising arrears to power generation companies that has risen to Rs 13,432 crore. These figures were presented by Dr Raut during a presentation given to Chief Minister Uddhav Thackeray on Energy Department.

 

 

A concept paper designed by Energy Department reveals that franchisee structure is more or less being tailored as per the current telecom sector with multiple players envisaged in one region to provide better services to the consumers, the sources disclosed. Though the model looks attractive on paper, the condition about letting companies choose their consumers could prove to be contentious. This one condition about giving freedom to companies was common in distribution franchisee model that was floated by other State power distribution boards. It's however another story that nowhere in country the new power distribution franchisee model has yet taken off. In Maharashtra, the Maha Vikas Aghadi (MVA) Government is still holding cards to its chest as it's wary of adverse fallout in its rural vote bank. Because currently, the rural area does not have large consumer base. Even returns are not that attractive. Third and most important factor is agricultural load in rural landscape.

 

Therefore, some of the models being discussed include separating agriculture feeder into separate wing and same could be entrusted to MSEDCL itself. Since the sector is saddled with losses despite huge subsidy provided by State Government, no private entity would afford to foray into the rural agricultural arena. The franchisee model would be a long term concession agreement between MSEDCL and the private companies and many big industrial houses are already readying their plans to place their bets, the sources further claimed. The bids would be invited by combining Residential, Commercial and Industrial (RCI) consumers base for Nagpur Region (it would cover entire Vidarbha) and like wise for Marathwada, Western Maharashtra and Konkan. Of them Vidarbha could be the most lucrative since in future there is possibility of outsourcing power generation as well as transmission units of Maharashtra State Electricity Board (MSEB). This is so as nearly 60 per cent plus power generation of State is done in Vidarbha. As of date in Nagpur Region the Residential Consumers numbers 44,50,071, Commercial-3,32,348, Industrial-61,399, Other-72,186, Agriculture-8,65,484, HT Consumer-3065.

 

The total demand raised by MSEDCL was 2712.35 crores and realisation is Rs. 2637.75 crores, reveal the figures with The Hitavada. Central Government intended amendment to Electricity Act has talked about providing distribution franchisee in power sector to preferably energy producers. The policy makers claim is that if the power tariff is to be brought down, it would require combining production and distribution under one company. Hence in future, the franchisee model of MSEDCL could be similar in nature to pare down the huge losses and reduce burden on tax payers.