Maharashtra to split MahaVitaran into four regional entities

Move to increase revenues by tapping pilfirages, reduce distribution and Aggregate Technical and Commercial losses

The BJP-led Maharashtra government proposes to split state power distribution utility MahaVitaran into four regional units on the lines of Gujarat, Madhya Pradesh, Karnataka, Rajasthan and other states.

State power minister Chandrashekhar Bawankule told Business Standard, "The government is quite serious to implement it with an objective to increase revenue by effectively tapping pilfirages especially further reducing distribution losses and also the aggregate technical and commercial losses (AT&C). Further, the government hopes to improve the efficiency and bring in transparency in the functioning of the distribution sector in general."

MahaVitaran currently has a consumer base of 22.5 million and its monthly revenues range between Rs 3,500 crore and Rs 4,000 crore.

MahaVitaran official, who did not want to be identified, said over the years the MahaVitaran's distribution losses at the state level have reduced to 14.4% from as high as 34%.

"However, the distribution losses are still high in Jalgaon (22.6%), Nanded (20.9%), Aurangabad (19%), Latur (18.6%), Nashik (16.8%) and Konkan (15.4%). The formation of region-wise units is expected to tackle the issue effectively. The reduction in distribution losses and also in AT&C losses will help increase the monthly revenue which can be put to use for the strengthening of distribution infrastructure across the state," the official infofmed.

The state government's move comes close on the heels of MahaVitaran failed to to figure among first five during the recent ratings analysis conducted by CARE ratings agency. MahaVitaran ranked sixth with A grade after Dakshin Gujarat Vij Company Limited, Uttar Gujarat Vij Company Limited, Madhya Gujarat Vij Company Limited, Paschim Gujarat Vij Company Limited and West Bengal State Electricity Distribution Company Limited.

CARE had cited few concerns about MahaVitaran's functioning. According to the ratings agency, there was high leveraging levels, due to working capital debt as well as debt funding for capex and significant dependence on subsidy support from state government which has been increasing due to rise in cost of power supply & continuing subsidized nature of tariff towards agriculture category.

However, CARE observed that improvement in cost coverage and interest coverage ratios, reduced AT&C losses, improved sustainability parameters and collection of receivables have resulted in an increase in score notwithstanding weakened subsidy support received by MahaVitaran.