The Maharashtra State Electricity Distribution Company (MSEDC) took a giant leap towards privatisation on Wednesday by approving franchises for two of its major loss-making Nagpur and Aurangabad divisions.
The MSEDC board officially gave Nagpur to Spanco for a net present value of Rs 5,350.16 crore (reserved amount Rs 4,674.55 cr) and Aurangabad to GTL for Rs 7,246.47 cr (reserved amount Rs 6,946.58 cr).
The contracts span a period of 15 years beginning January 2011.
Three years ago, MSEDC began a franchise model in Bhiwandi, which till then was notorious for power theft and huge revenue losses.
Torrent, the company in Bhiwandi, that now distributes power on behalf of MSEDC, has brought transmission and distribution (T&D) losses down to 20% from 44%.
In Nagpur and Aurangabad, T&D losses are 30% and 50%, respectively.
MSEDC now gets more than Rs 8 cr per month in Bhiwandi, which is more than its basic calculations. Consumer satisfaction also seems to have reached the highest level because the number of complaints has reduced drastically.
MSEDC expects partial privatisation to aid a considerable recovery from the existing financial crisis.
Private companies will pay MSEDC in equated monthly installments. MSEDC employees will have an option of joining the franchise on higher salaries.
Those unwilling to join will get postings elsewhere in MSEDC’s network spread across the state.
An MSEDC spokesperson said that franchises will have the freedom to initiate new consumer service measures. “However, they will not be allowed to charge more than the regulated rates.”
The company has been unable to recover cumulative dues of Rs 10,000 crore in monthly bills, primarily because of political interference.
The agriculture sector has not paid Rs 6,900 crore while the local-self governments have not paid a bill of Rs 1,400 cr.
The Mula Pravara Society, which distributes state utility’s supply to five tehsils in Ahmednagar district, also has to pay Rs 2,200 crore.
MSEDC is also having difficulties in paying a monthly bill of Rs 850 crore to the state generation company Mahagenco, which supplies 75% of its daily requirement.