Report of Indian Institute of Public Administration ... - Ministry of Power

MAHARASHTRA
EXECUTIVE SUMMARY
Till a decade back, Maharashtra State enjoyed a pride of place amongst the highly
industrialised States in the country. One of the important contributing factors for this
achievement was comfortable power supply position in the State. With adequate
generating capacity and extensive transmission and distribution network, Maharashtra
State Electricity Board (MSEB) not only provided 24 hours power supply to all its
consumers including for agricultural pumps, but also assisted the needy neighbouring
States.
Later on, allocations of funds from Government of Maharashtra to MSEB started
drying up and the sector started suffering adversely. To meet the growing demand of
electricity in the State, Government of Maharashtra and MSEB embarked on setting
up of a largest private sector generating plant at Dabhol. From the beginning, it ran
into a number of controversies and after commissioning of first stage of this power
project, it was abandoned midway through. A period of inaction in taking required
steps to augment the generating capacity followed. As a result, no significant
generating capacity was added in the State during the period 2000-05. Consequently,
the consumers of MSEB continued to face increasing quantum and duration of load
shedding year after year.
Government of Maharashtra was quite aware of the large quantum of investments
needed in the power sector to meet growing needs of the sector, the precarious
financial health of MSEB and hence the urgent need to reform the sector. In the year
2002, Government of Maharashtra published a White Paper detailing the condition of
the power sector in the State, urgent need of reforming MSEB and the policy of
Government of Maharashtra with regard to reform agenda. Restructuring of MSEB
into separate companies for generation, transmission and distribution (one or more)
along with implementing an agenda of internal reforms (initially, while in ownership
of the State) was proposed in this White Paper. At that stage, it was envisaged that the
restructuring of MSEB would be taken up in the year 2003.
However, the restructuring could not be accomplished in the year 2003. It was done
later in June 2005 as mandated in the EA, 2003. Government of Maharashtra
restructured MSEB into four companies under the Companies Act, 1956 namely a
generating company, a transmission company, a distribution company, and a holding
company, holding Government’s equity in the other three companies.