We're intent on turnaround within two years: MSEDC head

Maharashtra State Electricity Distribution Co (MSEDC) is looking to turn itself around in the next two years, even after inheriting a huge cash deficit of Rs 1000 crore according to Sanjay Bhatia, managing director, MSEDC. The company has outlined a plan to bridge the state's power shortage, and is in the process of establishing its investment requirements, he said.

Maharashtra State Distribution Co, also known as Maha-Discom, came into existence mid-June, after the much-delayed trifurcation of the erstwhile Maharashtra State Electricity Board (MSEB) into MSEDC, Maharashtra State Power Generation Co and Maharashtra State Transmission Co.

MSEDC continues to be the retail face of the state's electricity infrastructure, with all sub-transmission and distribution activities under its charge.

Bhatia, who has been part of the MSEB as its secretary since 2003, said the change has been for the better, especially as the trifurcation will allow better management for each of the three companies. He is optimistic about the power scenario in the state, and says it is on the "right track".

Turnaround plans: MSEDC inherited 35.5 per cent of the losses of MSEB, and a cash deficit of Rs 1000 crore. It currently has a collection efficiency of 90 per cent. Total revenues for the distribution company are estimated at around Rs 14000 crore a year. Most of this goes towards power purchase costs. Normal expected return on equity is 14 per cent, which has not been achieved for years.

Despite such obstacles, Bhatia remains unfazed. "We want to turn around the company in two years, though given our deficit, this should take about four-five years. I also want to reduce transmission losses by at least 3 per cent every year, but this will be a tough task," he said.

"We have chalked out a detailed action plan for this, including energy audit, metering of transformers, etc. We are also trying to implement energy accounting at every level," Bhatia said.

Impact of trifurcation: He has seen the difference in the two-and-a half months that he has headed this organisation, Bhatia said. "In August last year, collections were Rs 880 crore. This year, for August, they have jumped to Rs 1230 crore. Results are visible in catching theft, and increase in realisations and in consumer focus," he said.

MSEDC is trying to win back the consumer focus it had lost in the last eight-ten years, he said. According to Bhatia, political interference has also reduced substantially.

"Earlier, we could not disconnect a user despite arrears. Today, the situation has reversed, and I have the (government) backing. The cabinet asks how many connections have been disconnected, how many cases have been filed," he said.

Bhatia says Maha-DisCom is focusing on electricity theft. "We are better able to catch the theft now, the new law on theft has also helped. From every zone, we get 150 cases of thefts, action everyday. We have taken action for thousands of cases now," he said.

Long-term plans: "We have inherited a 4,000 MW shortage in a total peak demand of 13,000 MW. By 2010-11, this shortage would rise to 10,000 MW, if nothing happens. So, this is the additional quantity of power we need, by that time," Bhatia said.

The generation company - Maharashtra State Power Generation Co - is setting up two plants, totalling 500 MW, to be ready by mid-2006. It is also planning another 3,000 MW capacity, from three plants to be set up at Talegaon, Uran and Kaparkheda.

MSEDC has also tied up for a number of projects with National Thermal Power Corporation, which will allow addition of 2,660 MW by 2010-11. Apart from this, it has also approached the Maharashtra Electricity Regulatory Commission to invite tenders for 2,000 MW through competitive bidding, where private sector would be involved.

"In addition, with the resolution of the Dabhol dispute, I expect 1,800 MW capacity to be added by September 2006," Bhatia said.

Tackling immediate shortage: "In the festival season, we will try to run the Koyna plant all day, by taking more water. This plant has potential to produce 1,800 MW all 24 hours, but because of water usage restrictions, we normally run at this capacity for only four hours in the evening," Bhatia said.

MSEDC is also working on demand management programmes to tackle power shortages, and Bhatia has outlined two of these. "The first is a feeder-separation plan, where we give separate feeder connection, so that electricity is given separately for residential purposes," he said.

This scheme has been successful in Andhra Pradesh, Gujarat and Rajasthan, according to Bhatia. For this, separate lines need to be put to villages and this would cost Rs 300-400 crore, which will be funded through loans.

"The second programme is a single-phase one. This will allow only electrical appliances working on single-phase meters, such as bulbs and fans. We need to put single-phase transformers in villages, which would cost about Rs 200 crore. The state government would provide the funding," he said.

Investments: "We need to put in a lot of money, especially as our infrastructure has become old and weak. To meet the standards of performance, we need to invest," Bhatia said.

He said MSEDC has, for the first time in the country, prepared sub-division-wise load plans. This will also help in identifying investments required for the additional infrastructure, he said.

We are also preparing a sub-division-wise load management for the next four-five years, he said.

"For all this, substantial funding is required, which we are in the process of working out. It will be clear in the next two months. Construction plans are for the next three-five years on existing as well as future infrastructure," Bhatia said.

Restarting Dabhol: "The plant will be ready by March 2006, but the problem is availability of gas, which can happen only by September 2006" he said. The government-nominated operators NTPC and Gail have also indicated that gas supplies are likely to start by September 2006.

Bhatia believes gas pricing may not be a major issue as Ratnagiri Gas & Power Pvt Ltd (RGPPL) was looking at a 25-year supply contract, for which the rates are lower. "We need the liquefied natural gas at not more than $3.70/mbtu (million british thermal units), to maintain our stated power cost of Rs 2.30 a unit," Bhatia said.

According to Bhatia, the joint venture agreement is being finalised between all the parties and the state is yet to decide whether MSEDC will have a nominee on the RGPPL board.

Losses due to recent floods: Bhatia pegs MSEDC's losses during the recent floods in the state at around Rs 300 crore.

"If we take a replacement cost, we will incur a loss of around Rs 300 crore," Bhatia said.

The damage includes collapse of 14 transmission towers, in addition to 5,000 high-tension poles, and 10,000 low-tension poles. Apart from this, 7,000 distribution transformers also failed, Bhatia said.

Blueprint for the future

Maha-Discom was formed after the trifurcation of Maharashtra State Electricity Board into MSEDC, Maharashtra State Power Generation Co and Maharashtra State Transmission Co

MSEDC inherited 35.5 per cent of the losses of MSEB and cash deficit of Rs 1,000 crore

Due to trifurcation, now there is less political interference; focus is on dis-connections for non-payment and electricity thefts

Tie up with National Thermal Power Corporation (NTPC) will allow addition of 2,660 MW by 2010-11