IGIDR, which was appointed by the state government to draft a report on MSEB, has stressed the need for cost-cuts through technical efficiency improvement and reduction in labour cost, pilferages and interest burden through proper restructuring.

The report says better collection will improve MSEB's revenue. It is significant as the state is slated to table a Maharashtra Electricity Reforms Act in the coming monsoon session of the state legislature.

IGIDR has advocated a hike in agriculture tariff to Rs 0.5 per kWh and cut in auxiliary losses to earn additional revenue through sale of surplus electricity. Reduction in coal consumption would result in savings to the tune of Rs 84 crore when thermal efficiency improvement would be one million tonnes. In case of thermal efficiency improvement of 1.7 million tonnes, the cut in cost would be Rs 140 crore.

On enhancement of labour productivity, the report has said that the figure for customers per employee in MSEB is 103, which is 30 per cent lower than the Andhra Pradesh State Electricity Board. Considering average employee cost of Rs 7,000 per month, it would save between Rs 118 crore and Rs 215 crore annually.

Expressing deep concern over the burgeoning trend of subsidies, IGIDR has said that if the state government wants to subsidise any sector, "the MSEB should estimate the subsidy amount in a transparent manner and the amount should come explicitly from the state budget".

Total subsidy for agriculture was Rs 3,058 crore, higher by Rs 756 crore from the estimates of the Planning Commission for 1999. The per unit subsidy for the domestic sector was Rs 1.14 while cost recovery was 47 per cent. The domestic sector got a subsidy of Rs 557 crore while that provided by MSEB was over Rs 3,674 crore.

According to the report, rise in one paise per unit charged to the agriculture sector would provide the MSEB an additional Rs 14 crore. It has reiterated that no firm could be commercially viable providing this large amount of subsidy and thus has reiterated that the state government should compensate this from the state budget.

Expenditure on purchased power which was the second largest component after fuel charges draws serious attention since it shows the highest compounded average growth rate of 26.8 per cent. In absolute terms, it increased by more than three times while its share in total expenditure of the MSEB increased from 21 per cent to 31 per cent.