Maharashtra govt proposes to split MahaVitaran into five entities

The government plans to split the Maharashtra State Electricity Distribution Company (MahaVitaran) into four or five entities.

Power minister Chandrashekhar Bavankule’s advisor, Vishwas V Pathak, told Business Standard: “The proposed initiative aims to bring transparency and accountability. Besides, formation of the companies will give the proposed entities administrative control and more powers to improve efficiency.” A MahaVitaran team would soon visit states where multiple companies operate in the power distribution sector. Delhi, Rajasthan, Madhya Pradesh, Bihar and Jharkhand have implemented this. Pathak, however, also said a final decision in this regard would be taken only after taking all stakeholders on board.

The state-run company, which distributes electricity to consumers across Maharashtra except Mumbai, was established after the erstwhile Maharashtra Electricity Board was restructured into four companies in June 2005.

MahaVitaran has a consumer base of 22 mn, expected to cross 23 mn by the end of the financial year. Its monthly collection is about Rs 3,000 crore. Distribution losses were reduced to 14 per cent by the end of March 2014 from 22 per cent in 2007-08. The transformer failure rate also dropped to 9.18 per cent by the end of March 2014 from 14.03 per cent in 2008-09. Maharashtra Electricity Regulatory Commission’s former member Jayant Deo said: “On the lines of Section 131 of the Electricity Act-2003 (on reorganisation of a board), a proper draft scheme is required to be prepared for discussion with all stakeholders. It should cover power-purchase agreements, manpower, assets and liabilities, direct subsidy, cross-subsidy and receivables. Since the cost of failure is very high, such a draft scheme and discussion is an absolute must.”

There is a need, he added, for private enterprise to bring efficiency and accountability in distribution company.

MahaVitaran gets power from Maharashtra State Power Generation Company as well as central and private projects. The company had signed 25-year agreements with power producers. MahaVitaran will get 4,685 Mw in 2014-15; 1,294 Mw in 2015-16; 1,550 Mw in 2016-17; 4,154 Mw in 2017-18; 5,323 Mw in 2018-19 and 2,885 Mw in 2019-2020.

The proposal to split MahaVitaran has evoked some scepticism, too.

Ashok Pendse, consumer representative at MERC, said he was doubtful if the work culture at MahaVitaran will change with the proposed split. “If that is not achieved, consumers will be at the mercy of the same individuals. Similar experiments in other states have not necessarily achieved intended goals,” he added.