1. LN COLLEGE OF MANAGEMENT & TECHNOLOGY
MALAD (WEST) MUMBAI – 64.
ACADEMIC YEAR
(2007-2008)
SEMESTER I
PROJECT ON
“PROBLEM OF ELECTRICITY IN MAHARASHTRA”
PROJECT GUIDE
PROF. RANJIT KRISHNAN
SUBMITTED BY
HEMANT PALAV
ROLL NO. F029
MBA (FULL TIME)

2. DECLARATIONDECLARATION
I, HEMANT M. PALAV. Student of MBA {full time} LN COLLEGE
OF MANAGEMENT & TECHNOLOGY (Semester IST) hereby
declare that I have completed this project “PROBLEM OF
ELECTRICITY IN MAHARASHTRA” in the academic year 2007-
2008. The information submitted is true and original to the best of my
knowledge.
HEMANT M. PALAV.
MBA (FULL TIME)
ROLL NO. FO29
CERTIFICATECERTIFICATE
I, PROF. RANJIT KRISHNAN hereby certify that Mr. HEMANT M.
PALAV student of LN COLLEGE OF MANAGEMENT &
TECHNOLOGY MBA {Full Time} (Semester IST) has completed
project in the academic year 2007-2008.The information submitted is
true and original to the best of my knowledge.
SIGNATURE OF PROJECT GUIDE
2

3. ACKNOWLEDGEMENT
It gives me pleasure to present this project on “PROBLEM OF
ELECTRICITY IN MAHARASHTRA”. The subject matter is made more
compact and logical.
I am gratefully acknowledged the valuable efforts, suggestion and
clarifications provided by many by making this project practical.
It would be rather unfair on my part for not thanking our college LN College
Management & Technology for having shown their continuous faith on
me.
I take this opportunity to express our sincere appreciation and gratitude to
our college administrative staff that helped me.
I express my grateful thanks to every one who have contributed even in a
small way towards successful completion of this project.
3

4. CONTENTS
Sr no. Particulars Page
no.
1. INTRODUCTION 5
2. SHORTAGE OF ELECTRICITY IN MAHARASHTRA 7
3. PROBLEMS OF ELECTRICITY IN MAHARASHTRA 8.
4. PLANS 9.
5. UNION BUDGET 2007-08 AT A GLANCE - POWER 10.
6. SHORTFALL IN FIVE YEAR PLAN & FACE TO
FACE WITH UNION POWER MINISTER
MR.S.S.SHINDE
11.
7. SUGGESTION
8. CURRENT SITUATION IN MAHARASHTRA POWER
SECTOR
14.
9. ACCLERATED POWER DEVELOPMENT &
REFORMS PROGRAMME (APDRP)
21.
10. RURAL ELECTRIFICATION 22.
4

5. 11. ALL INDIA INSTALL CAPACITY (in MW) 23.
INTRODUCTION
The power sector in MAHARASHTRA was organized as a separate
electricity board in mid 1950’s, after the 1948 Supply Act was passed. It
is being realized that the existing set up of SEBs are not enough to keep
pace with the growth in demand. The Electricity Act 03 (EA, 2003) has,
in particular, made ‘restructuring’ of SEBs on functional basis,
monetary.
MSEB (Maharashtra State Electricity Board) was restructured in June
2005 into four companies, which were incorporated under the
Companies Act, 1956. These were:
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6.  A generation company: Maharashtra state power Generation
Company Limited (MAHAGENCO)
 A transmission company: Maharashtra state Electricity Transmission
Company Limited (MAHATRANSCO)
 A distribution company: Maharashtra state electricity distribution
Company Limited (MAHADISCO) and
 A holding company: MSEB Holding Company Limited holding
Government’s equity in these three companies.
SR NO. NAME OF
COMPANY
MANAGING
DIRECTOR
DIRECTOR
(FINANCE)
DIRECTOR
(OPERATION)
1 MSEDCL Dr.AJAYBHUSHAN
PANDEY
ARVIND
GHOSH
ANIL
PALAMWAR
2 MSPGCL AJOY MEHTA GULABSINGH
GIRASE
VINAY
BAPAT
3 MSETCL SUBRATO RATHO KHANDALKAR SHRISH
TAMOTIA
4 MSEB HCL SUBRATO RATHO VINAYAK RAO --
Restructuring has been done on the basis of a provisional Transfer Scheme
wherein the valuation of assets is based on book value of assets.
Government of Maharashtra’s resolution of January 2005, states that the
6

7. valuation of the assets of MSEB to be transferred to the companies should
finally be based on revenue potential of the assets transferred. The assets
would be revalued within a period of one year and this revaluation would be
effective retrospectively from the date of transfer. The financial restructuring
after revaluation, was to be determined in such a manner that the consumers
would face minimum increase in tariff.
MAHARASHTRA STATE FACES 5700 MW POWER SHORTAGE
7

8. The western region of the country comprising Maharashtra, Gujrat,
Madhya Pradesh, Chhatisgarh, is facing acute power shortage of nearly
10000 MW, which is mainly due to increase in demand. Maharashtra faces
maximum shortage of more than 5,700 MW followed by Gujrat (3,000
MW), Madhya Pradesh (1,000 MW) and Chhatisgarh (300 MW)
8

9. PROBLEMS OF ELECTRICITY IN MAHARASHTRA
There are five major problems face by electricity companies in
MAHARASHTRA
1) LOSSES BETWEEN GENERATION AND TRANSIMISSITION:
It is the major problem faced by the companies that there is loss in
transportation between the electricity generation and transimissition. First
generation company generate the electricity through power station like
PARLI, CHANDRAPUR, URAN (GTPS), KHAPERKHEDA etc. then it
transport to the transmission company. In that process there is loss of
electricity cause of infrastructure, technology
2) THEFT:
It is the serious and major problem face by the electricity
companies. In June 2007 PM MANMOHAN SINGH was addresses to the
MD of all state electricity companies about this problem. In
MAHARASHTRA the rate of electricity theft is near about 28%. There are
11 zones in MAHARASHTRA like AMRAVATI, AURANGABAD,
BHANDUP, KALYAN, KOKAN, KOLHAPUR, LATUR, NAGPUR,
NAGPUR (U), NASHIK, and PUNE. Out of 11 zones every zone has the
problem of electricity theft.
3) TENDENCY OF EMPLOYEES:
The electricity companies are formerly MSEB and now it’s the
public undertaking companies. The employees of state government are not
interested in the work and the management level also neglects the
9

10. performance of employees. There for there is not optimum utilization of
human resources and it resulted into the losses of companies
4) SHORTAGE OF PERSONNEL:
The electricity companies have problem of the shortage of personnel
because the decision of the recruitment is depend upon the state government.
Electricity companies have the workload and it is increases day-to-day.
Cause of the
5) LACK OF FINANCIAL HELP FRON CENTRAL:
After a dismal performance in the 10th
plan, the power sector is facing
a similar fate in the 11th
plan. There is a shortfall of 4,50,000 crore during
2007-12, which is nearly 45% of the total funds requirement.
MAHARASHTRA STATE PLANS NEW POWER TRADING
COMPANY
The holding company is planning to set up new state power trading
company. Though this company; it can buy power from independent power
producers. Power purchase agreement can be signed more easily without the
gestation period. The state is also looking at JVs with private players in
transmission sector. On the background of severe power shortage in the
state, the government will encourage and focus small power projects of 50-
100 MW where PPAs can be signed quickly.
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11. RISING STEEL PRICES AFFECT MILLS POWER PLANS
The state government’s plans to tap sugar factories as an alternatives
source of power are affected due to rising steel price. The use of sugarcane
bagasse as a source of energy for production of power would have helped to
overcome huge power deficit in the range of 5000-6000 MW. Last year, the
state government in association with IL&FS launched ‘URJANKUR
NIDHI’ of Rs 418 crore for this purpose. The main aim of this fund was to
help sugar co-operatives in the state to set up their own co-generation plants
based on bagasse. Under the scheme, SPV was to be created which would
own the plant. The fund managers found proposals of 16 sugar factories,
which had, potential of generating 350-400 MW. However, there is hike
almost 20% in steel prices in last one year, which has made setting of power
to MSEDCL at Rs3.05 costly. The steel components in co-generation plant
is almost 60% and cost of commissioning such a plant is around 4.5 to 5
crore Rs, which is almost equivalent to any thermal plant.
UNION BUDGET 2007-08 AT A GLANCE (POWER SECTOR)
11

12. - Electricity generation has recorded a growth rate of 7.5 % in April to
December
- MOP has awarded two Ultra Mega Power projects (UMPP) in sasan
and Mudra. Seven more UMPPs are under process. Two more Ultra
Mega Power Projects to be added by July. 2007.
- The Ministry of power will facilitate setting up of merchant power
plants by private developers and private participation in transmission
projects.
-APDRP is being restructured to cover all district headquarters and
towns with a population of more than 50000. Allocation of funds to
APDRP hiked from Rs 650 crore to Rs 800 crore.
-19,758 villages have been covered so far under Rajiv Gandhi Grameen
Vidyutikaran Yojna. Allocation of funds to RGGVY increased from Rs
3000 crore in 06-07 to Rs 3983 crore in 07-08
12

13. SHORT FALL IN POWER FOR 11TH
PLAN
After a dismal performance in the 10th
plan, the power sector is facing a
similar fate in the 11th
plan with the centers, states and private companies’
estimates to fall short by 4,50,000 crore during 2007-12, which is nearly
45% of the total funds requirement. The needs about Rs. 10, 31,600 crore to
add more than 70000 MW of generation capacity, besides creating and
upgrading transmission and distribution systems. However the sector will
have a shortfall of Rs 451607 crore, as stated in the report of the working
group on power for the 11th
plan.
The major portion of the shortage is for states which are stated to make
total capacity additions of around 24000 MW in the 11th
plan and need Rs
514167 crore. Out of Rs 359917 crore of total debt required the states can
arranged for 164973 crore. This leaves a gap of close to Rs 270000 crore in
debt and equity for the states taken together, after considering an additional
Rs 80000 crore in funding by special schemes such as APDRP and RGGVY.
According to the report of the working group, the centers needs total
funds of Rs 300000 crore, including Rs 90000 crore in equity. Of this, it is
facing a shortfall of Rs 26897 crore in equity and Rs 50807 crore in debt.
13

14. Power Minister Mr. Sushil Kumar Shinde, talks on the 10th
Five Year
Plan, National Capacity Addition, Energy Conservation Union
Initiatives and his Vision for India.
IEEMA RESEARCH GROUP
Question- Unlike 8th
and 9th
five year plans, the 10th
five year plan has a
greater achievement in terms of capacity addition. According to you, what
will be the figure achieved against the targeted addition pf 41,100 MW to
the Generation capacity.
Answer. Sometime back it was reported in the print media that due to delay
in some of the projects the slippage would be of the order of about 10000
MW in the 10th
plan to examine why we had gone down in achievement as
compared to the target
Whatever we have achieved even after slippage of 10000 MW in the 10th
plan, we have achieved greater addition in capacity as compared to 8th
and
9th
plans we could add approximately 20000 MW. However, in the 10th
plan,
we have done capacity addition of 30000 MW.
When I went into details, I noticed that there was slippage since the gas
based plants could not come on line as LNG was not available, though it was
expected that the LNG would be available from the foreign countries. Also
the gas was not available either locality or from foreign countries.
14

15. QUESTION – Though govt has opened doors for private developers in
transmission sector, there are very few takers. Do you feel we need more
private or public-private partnership in transmission sector?
ANSWER- Yes, absolutely we have opened the transmission sector also for
private or as joint ventures. In Himalayan range, there has been public-
private partnership. So far, we have 9,500 MW and we intend to go up to
27000 MW. We have covered all regions- east, west, north and south. This
shows that we have connected to each other so that the electricity generated
at a particular place can be taken to other places. We have to speed up this
now and we are doing so. I must tell you that our powergrid is doing
excellent work in this area.
QUESTION -Rajiv Gandhi Gamin Vidyutikaran Yojna (RGGVY) is the
most notable initiative taken by the Ministry of Power for the creation of
rural electricity backbone. With the current pace of progress, do you feel 1
crore house hold i.e. 125 lakhs villages electrified by 2009?
ANSWER- we are committed to giving electricity to each and every body by
the year 2012, every home in the country by 2009. Even village will be
electrified in the country. In the 10th
plan, we have spent about rupees 5000
on the initiatives and in the beginning itself, we have electrified more than
28000 villages and this work is allotted not only to the utilities, but also to
central utilities like NTPC, POWERGRID and other power organizations.
15

16. QUESTION -Your message to the countrymen for power saving?
ANSWER- Power saving is very important. I have been telling that if we
save 20% of power, we save Rs 80000 crores and you see the perspective of
this problem. I am quite sure that if we make people aware of the problem
and discuss the same with them, it can be solved. I am quite confident that
those who are using electricity unnecessarily will also stop using when not
required.
IMPORTANTS:
- “If a state is having power shortage then the central government should not
come and give it to them. It is the responsibility of the state to look after the
problems of the people."
- “After the UPA government came into power, under the leadership of our
PM Manmohan singhiji, we took the decision to restart ENRON”
- “Power saving is a very important thing. I have been telling this if you
save 80000 crore and you see the perspective of this problem
MERC SUGGESTS PRIVATE PARTICIPATION TO LESSEN POWER
16

17. SHORTAGE
To improve power supply situation in the state, MERC has suggested some changes in
power sector. The commission in its communication with the state government has
suggested for adopting a franchisee model where private sector entities would be
allowed to set up small power plants at various places undertake distribution and collect
payment from the consumers. As per estimate, the franchisee model plants could
generate over 7000 MW of power.
MERC has started that with increasing power crunch, there is need to augment power
production and installation of short gestation generation capacity. It has recommended
use renewable energy sources such as biomass, small hydro and wind along with
conventional energy sources such as liquid fuel. The new system will help to reduce
technical losses and it will also allow private sector to function with relative
independence.
ECO-HOUCING GAINS MARKET ACCEPTANCE AND BANK-SUPPORT IN
THE STATE
The eco-houcing program, installed in Pune with USAID support in the last two
years, has successfully addressed the factors influencing the scale-up of sustainable
houcing development. Policy and market intervention led by IIEC in the first phase,
have helped accelerated the adoption of energy efficient technologies and practices in
the residential sector and have setup stage for expansion of the program at a national
level.
UNEP SCHEME TO LIGHT HOMES IN RURAL PARTS OF THE STATE
United Nations Environment Programme (UNEP) with the help of Bank Of
17

18. Maharashtra is bringing loan scheme for solar system in rural parts of the state. The
similar scheme has been already successful in Karnataka. This scheme would be ray of
hope to many houses in rural Maharashtra where power situation is worsening day day.
There is large market for solar lighting products.
Mr. D. Mallya, CMD, Bank Of Maharashtra said that BoM has designed a scheme
called Mahadeep for financing solar home system by providing finance without
collateral. The objective is to reach out to more than 2000 beneficiaries in the state by
March 2008. UNEP has identified around seven vendors to run this loan programme
across eight districts, which include Ahmednagar, Kolhapur, Nashik, Pune, Ratnagiri,
Satara, Sangli and Sindhudurg.
CURRENT SITUATION OF MAHARASHTRA POWER SECTOR
1) SEB’s rating
State Government Parameters
18

19. Haryana, Delhi, Goa, Gujarat , Karnataka and Uttar Pradesh have scored higher than the
rest of the states on account of good structural adjustment support provided to the
utilities along with above average subsidy payment track-record and satisfactory
progress against targets laid down in MoU / MoA with Ministry of Power (MoP). Many
states are gearing up provide aggressive financial and structural assistance to the
respective power sectors taking the next step in reforms in the sector. These include
formulation of Restructuring Plans and unbundling on functional lines. With these
developments in view, the scores are expected to go up in the next review exercise
The states need to proactively address the issues of addition to the power
generation capacity in the state to cope up with the increasing demand in the sector.
Most of the Electricity Departments in the North East and the Electricity Department in
Sikkim, despite having taken limited steps in terms of reforming the sector, have been
able to secure decent scores against the parameter ‘subsidy payable’ - since the Non-
19

20. Plan expenses to the Departments for meeting cash shortfall is being treated as
‘subsidy’ payment. However, for most of these states, the non-plan allocation for
meeting the expenses of the department are stagnating, implying curtailing of power
purchases unless cash collections are steeped up significantly
`1) ENERGY SHORTAE
MAHARASHTRA POWER SECTOR PROFILE
ENERGY SHORTAGE (%) & PEAK DEFICIT(%)
2)TRANSMISSION AND DISTRIBUTION LOSSES
TRANSMISSION & DISTRIBUTION LOSSES (%)
20

21. 3) SHARE OF POWER SECTOR IN MAHARASHTRA
MAHARASHTRA POWER SECTOR PROFILE
SHARE OF POWER SECTOR OUTLAY IN MAHARASHTRA AS %OF
TOTAL OUTLAY
VII PLAN
- 26.14%
VIII PLAN - 21.70%
IX PLAN - 15.20%
4) Comparative Performance during last five years (1998-2003)
21

22. Five year block: 1998-99 to 2002-03
Over
1993-94 to 1997-98
Generation (BU) during the period
Improvement of + 6.5%
yearly generation
Plant Load Factor (%) at end of
period
Improvement of + 7.4%
(during five years)
Capacity addition (MW)
22

23. + 19.5% improvement in
Yearly addition [3750 MW
over 3138 MW]
Transmission lines addition (ckm)
+ 36.5% improvement in
Yearly addition [7011 ckm
over 5136 ckm]
H.T. Transformation (Substations)
addition (MVA/ MW)
+ 39.7% improvement in
Yearly addition
[11577MVA over 8282
MVA]
inter-regional transfer capacity
addition (MW)
Five fold improvement in
Yearly addition
[1080 MW over 220 MW ]
23

24. Fresh capacity approvals
TEC accorded to generation projects
(MW)
+ 5.2% increase on yearly
average
Power deficit (MU) at end of period
Improvement of 2.5% over
five years
Peak shortfall (MW) at end of period
Improvement of 3% over
five years
24

25. Undertakings under Ministry of
Power
+ 16.5% increase yearly
+14.4% increase yearly
5) Accelerated Performance during last five years (1998-2003)
Electricity Generation
Enhanced generation performance during current five year block period of
2474 BU Compared to 1871 BU during the previous block.
• Yearly generation at beginning of the five year block of 421 BU has
improved to 531 BU (average yearly growth rate of more than 5%)
while generation from Central stations has improved by more then
6%.
25

26. • Plant Load Factor of thermal stations has increased in the country
from 64.7% in 1997-98 to 72.1% in 2002-03 and in Central sector
stations from 70.4% to 77.1%.
Plant Load factor (%)
During last 9 months of current year
2003-04
Generatio
n
- Overall -411 BU
-Central
stations
-167 BU
PLF Overall -70.8%
Central -76.3%
26

27. stations
Improved performance in fresh additions with more than 18,000 MW of new
generating capacity and 35,000 ckm of H.T. transmission lines added during
the five years block against 16,000 MW and 26,000 ckm in previous five
years block period.
Accelerated Power Development & Reforms Programme (APDRP) has been
initiated to provide financial assistance to States for strengthening of
Transmission & Distribution networks.
• Cumulative sanctions Rs. 16,647 cr. and releases Rs, 3,113 cr. till end
Mar.'03 it includes Rs. 379 cr. as incentive paid during 2002-03 to
Maharashtra, Gujarat and Haryana for exhibiting loss reduction.
- During 2002-03, under incentive component of APDRP; states of
Maharashtra, Gujarat and Haryana reduced their losses by over Rs.
1661 cr. and therefore claimed incentives of Rs. 830 cr.
- During 2003-04 budget allocation of Rs. 1750 cr each for Investment
and incentive component.
• Turnaround plan for State power utilities: Introduced system of
rating of SEBs w.r.t. reforms process.
27

28. • Six level intervention strategy - A six level intervention strategy
formulated for distribution reforms at National, State, SEB,
Distribution Circle, Feeder & Consumers levels" to ensure
accountability, deliverability and performance at all levels.
• Anti Power -Theft Provisions - For curbing the theft and pilferage of
power, the States of Andhra Pradesh, Karnataka, Madhya Pradesh,
Uttar Pradesh and West Bengal have already enacted the Anti-Theft
Legislation. Further, Maharashtra, Punjab, Bihar, Kerala and Gujarat
have also taken steps in theft control resulting in increase in revenue
collection and reduction in commercial losses.
• Acceleration in feeder metering
: Overall 86% of 11 KV feeders metering achieved with 100% in 10
States and more than 90% in 5 States.
• Consumer metering: 100% completed in 7 States, more than 90% in
5 States.
• Reliability index of power
supply being established:
17 towns/ cities reported
Reliability index more than
96%.
• AT&C losses in majority of identified circles have started
exhibiting reduction.
Rural Electrification
28

29. There are 80,000 villages, which are still unelectrified out of which 18,000
are situated in remote and inaccessible areas.
#Complete village electrification by end of Xth Plan.
# full household coverage by end of XIth Plan.
Villages electrified
Deteriorating performance, cause of concern, turnaround achieved in
year 2002-03
• Rural electrification included under "Pradhan Mantri Gramodaya
Yojana"
• States allowed to access 'Rural Infrastructure Development Fund,
RIDF.
• Accelerated Rural Electrification Programme initiated with focus
on unelectrified villages, dalit bastis and hamlets at low cost funds;
subsidy to extent of Rs. 564 cr. to cover 4% Interest subsidy during
Xth Plan
• Implementation of Kutir Jyoti intensified
- Budget provision of Rs. 100 cr. (for about 7.2 lakh single point
connections)
• Allocation enhanced from Rs. 175 cr. to Rs. 600 cr. under "Minimum
Needs Programme, MNP".
29

30. Rs. 500 cr. annual allocation for loan assistance by REC for villages and
hamlets electrification at 3% and tribal and dalit basis electrification at
1 % which will be waived off on successful project implementation.
- Rural Electricity Supply Technology (REST) Mission constituted with
emphasis on decentralized distributed generation for electrification of rural
areas.
- The Mission has been set up to develop the indigenous technologies for
meeting the needs of the rural power supply and operationalize the schemes
on commercially feasible terms.
- Distributed Generation has been identified as one of the mechanism for
ensuring supply of power in rural areas by way of setting up small
generating units based on a variety of local fuels alongwith localized
distribution.
- A Workshop on Rural electrification through Distributed Generation
System organized on 27th Aug.’03 was attended by representatives from
States. The audiences were given presentations by the Technology providers
and select NGOs were also called to share their experiences.
- REST Mission has evolved Short Term, Medium Term & Long Terms
strategy for rural electrification by using different technologies
30