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Godbole panel report on MSEB unbundling by July

S Ravindran

The energy review committee headed by former bureaucrat Madhav Godbole is working on a set of recommendations for unbundling of the Maharashtra State Electricity Board and its possible privatisation thereafter. The panel is due to submit its report in July.

The committee is at present studying the model of reforms adopted by the states of Orissa, Andhra Pradesh, Uttar Pradesh, Haryana and Karnataka.

The common feature in all these states is corporatisation of the SEBs and privatisation in certain cases.

"The panel is looking into all the models that are available in the country so far. The final model to be recommended is the one that will suit the interests of Maharashtra best," political sources who are familiar with the committee's deliberations said.

In the case of Orissa State Electricity Board, it has been unbundled into two generation companies, Orissa Hydro Power Corporation and Orissa Power Generation Corporation, and a transmission company, Grid Corporation of Orissa, which in turn is the holding company for four distribution companies.

OPGC has divested a 51 per cent stake to AES Transpower of the US. Gridco in turn has divested a 51 per cent stake in the three distribution companies.

Gridco, however, continues to hold the transmission rights in the state. In the case of Uttar Pradesh, a new entity has been created by the corporatisation of the electricity board, Uttar Pradesh Power Corporation. The Haryana State Electricity Board has been split into two entities and both have been corporatised.

One of them will focus on generation while the other will focus on transmission and distribution. UPPCL and the two Haryana entities are yet to be privatised.

In the case of UP, however, a separate corporate entity, Kanpur Electricity Supply Company, has been created for holding the distribution rights in Kanpur. This is in the process of being privatised.

The states of Karnataka and Andhra Pradesh are following similar models. In both these states, the respective electricity boards have been split into two companies.

One will hold the generation rights, the other will hold the transmission and distribution rights. Both the states have decided to privatise distribution.

Meanwhile, SBI Capital Markets, the merchant banking arm of the State Bank of India, has suggested yet another model to the committee. It has suggested that MSEB be split into a number of distribution companies.

The generation rights can be transferred to these distribution companies while the state electricity board can continue to hold the transmission rights throughout the state. Further, about 20 per cent of these companies will hold the distribution rights for 80 per cent of the electricity generated in the state.

Another 50 per cent of these companies will hold the distribution rights for about 10 per cent of the generation in the state. The balance 30 per cent will hold the distribution rights for the agricultural consumers.

Since, in Maharashtra, the farmers are a rich lot and are banded together under various sugar co-operatives with considerable economic muscle, power should be sold directly to them. These, co-operatives in turn can sell power to the farmers.

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