Clearing the decks for listing of Maharashtra State Electricity Distribution Company Limited (MSEDCL) on stock exchange, Maharashtra Government has decided to take over Rs 32,679 crore financial liability of the Discom. The move comes along with nod to setting up separate undertaking to supply power to agriculture pumps that would insulate the Discom from any future pressures. The recovery from agri sector is quite challenging and thus MSEDCL was feeling the pressure of mounting debts. The new Agri Utility will be named MSEB Agro Power Limited (MSAPL), which will be a subsidiary of MSEB Holding Company.

 

The State has also said that it would either infuse equity in the new company or provide grants upto Rs 2500 crore, that would form as working capital for the new company. The Rs 32,769 crore liability is linked to loans taken from time to time by Discom for strengthening distribution infrastructure and also due to supply of power to agri pumps at consessional rates. State said, it is going to issue bonds against the financial liability to various institutions with a repayment obligation stretching over a period of 15 years. With financial liability of Discom going to be written off, it would enable the company to reduce the tariff. Particularly, the industrial tariff, as they used to bear the cost of cross subsidy, is going to come down providing much needed relief to the manufacturing sector in Maharashtra. The industrial tariff was claimed to be one of the highest in Maharashtra, and much of that was due to cross subsidy element.

 

Even otherwise, Maharashtra Government had already committed to establishment of separate company to provide power to agriculture pumps so as to minimise losses for MSEDCL. The same was mentioned during the multi year tariff hearing with Maharashtra Energy Regulatory Commission (MERC) during last year. The new agriculture power company is going to come into effect from April 1, 2026, onwards. The notification by Energy Department mentioned that a tripartite agreement is going to be signed between Government, MSEDCL and lenders so as to restructure the existing loans and increase the repayment period. While the maturity of the bonds to be issued for Rs 32,679 crores will be 15 years, it would have lock in period of 10 years.

 

During that period, State will continue debt servicing, paying minimum assured sum to lenders and thereafter in remaining 5 years, the remaining principal amount is going to be repaid. Nod for availing central loan for Discom’s network upgradation Maharashtra Government has also decided to avail Central Government offer to take 0.5 per cent of State’s GDP as loan to strengthen the distribution network of MSEDCL. The funds will also help to strengthen the distribution company. Spelling out the demerger strategy, it is stated that post bifurcation, MSEDCL will continue to look after issues related to rolling out necessary infra for expansion of agri network. Further the new company will pay for utilisation of Discom’s services relating to billing, realisation of dues, resolving complaints, and as per MERC directives an allocation of Rs 1500 crore annually is going to be earmarked during the control period MYT 2026-2030.