Two Maharashtra government-owned power generation and transmission utilities are planning to come out with initial public offerings (IPOs) in the range of Rs 1,000-1,500 crore each by 2009-10 to meet their combined capital expenditure plans of around Rs 47,000 crore.
If they succeed, Maharashtra State Electricity Generation Company (Mahagenco) and Maharashtra State Electricity Transmission Company (Mahatransco) will be the first state government-owned power utilities in the country to float public offers.
Both the utilities have been earning profit since 2005-06 when erstwhile Maharashtra State Electricity Board (MSEB) was trifurcated into three separate companies — Mahagenco, Mahatransco and distribution utility Mahavitaran.
By the end of 2007-08, Mahagenco had earned a total profit of Rs 645.56 crore, while Mahatransco became richer by Rs 779 crore.
Mahagenco, which has a capital expenditure plan of Rs 30,000 crore, is in the process of setting up additional capacity of 6,800 Mw by 2011-12.
It is planning to raise 80 per cent resources through debt and the remaining through equity. For debt, Mahagenco has tied up with Power Finance Corporation (PFC) and Rural Electrification Corporation (REC).
Part of the equity will come by way of equity infusion from the state government and part through IPO. “However, before we take a final call on IPO, we need clearance from the state government,” clarified Mahagenco Managing Director Ajoy Mehta.
On the other hand, Mahatransco is gearing up for the challenge of 2011-12 by when Mahagenco and independent power producers will be generating additional 12,500 Mw of power, which needs to be evacuated from generation plants and carried up to distribution points.
Like Mahagenco, Mahatransco will also finance its projects by raising 80 per cent debt and 20 per cent equity. For debt it has tied up with PFC, REC and international agencies like the World Bank and the Japan Bank of International Cooperation.
The equity will be infused by the state government and IPO ranging between Rs 1,000 crore and Rs 1,500 crore, said Subrat Ratho, managing director of the company.
“Currently, we are in process of complying with various regulatory requirements before taking a final decision on the IPO,” Ratho added.
The trifurcation of MSEB also helped Mahavitaran earn a modest profit of Rs 80 crore in 2007-08, for the first time, as it managed to reduce its distribution losses from around 35 per cent to 22 per cent. A reduction in distribution losses by one per cent means addition in revenues by Rs 180-200 crore.
However, the distribution company has not yet proposed an IPO as distribution is very tricky business and affects millions of consumers, clarified a senior official from state government’s energy ministry.
After trifurcation, managing directors of each company could concentrate on core area of its functioning, which resulted in improving the performance of each entity, Mehta pointed out”.
During the days of the MSEB, the chairman of the board had to concentrate on distribution business, constantly do the fire fighting, so generation and transmission areas remain neglected, which resulted in the slump in the performance in the areas, he said”.
After the trifurcation, Mahagenco has able to improve its performance in all key areas like improvement in plant load factor (PLF), reduction in forced outage etc.
The Mahagenco’s PLF increased from around 73 per cent up in 2005-06 to 77 per cent in 2007-08. The percentage of forced outages also reduced from 10 per cent to 4.48 per cent. This clearly means, we managed to utilise our assets better, resulting in better financial results, he told.
Speaking about companies future plans, company has plans to set up 6,800 Mw of additional capacity by the 2011-12. And Out of which work on construction of plants which will generate 2,000 Mw is already underway and work for 1,000 Mw will take of very soon.
