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

Maharashtra
Need for Reforms
Considering the financial health of MSEB and necessity of huge investments in the
sector, it was clear that the State would need to approach the Central Government and
Financial Institutions to provide the necessary funds. Without these investments, the
sector would not have been able to meet the needs of a competitive economy,
resulting in an adverse impact on the State. Government of India had also taken the
initiative to evolve a national consensus for reforms in the power sector. From the
deliberations and decisions taken in the conference of Chief Ministers of States
(organised by the Central Government), it had become clear that Central Government
and Financial Institutions would be helping only those SEBs, which embarked on a
reform agenda. The Electricity Act, 2003 also encouraged competition in generation
and distribution segments and emphasised on reforms in the sector.
It was thus clear that for sustaining growth of the power sector and its ensuring
financial viability, it was necessary to reform the sector. Main objectives of reform as
stated by the Government of Maharashtra were:
(a) To promote development of an efficient, commercially viable and competitive
power sector;
(b) To provide reliable quality and uninterrupted power supply at reasonable prices
to all consumer categories; and
(c) To ensure that social and environmental aspects are fully taken into
consideration.
Steps taken by Government of Maharashtra
Earlier, the Government of Maharashtra had constituted the State Electricity
Regulatory Commission (SERC). In February 2001, the State Government constituted
an Energy Review Committee (ERC) to review the power situation in the State and
suggest broad future course of reforms for the power sector in the State. As a part of
the process of building consensus for reforms of MSEB, Government of Maharashtra
decided to publish a White Paper on the proposed reforms in the power sector. For
preparation of the White Paper, in April 2002, Government of Maharashtra released
advertisements in leading newspapers inviting responses on three documents, viz.,
ERC Report, Maharashtra Electricity Reform Draft Report and Government of India’s
Electricity Bill, 2001. Officials from MSEB visited the States that had undertaken
reforms and gave their suggestions. Minister (Energy) held wide-ranging discussions
with officials and staff unions of MSEB. After extensive consultations and after
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