MSEB's move has come in the wake of its decision to stop permitting establishments of captive power generation plants, using conventional fuels in the state. MSEB has stopped granting approval for fresh captive power plants, on the grounds that "substantial generation capacity, which has been added, would be sufficient to meet the demand from industries".

Simultaneously, MSEB fears that there would be a substantial fall in its revenue and high tension industrial consumers, if captive power generation continues especially, when it has been burdened with Dabhol payments and on the other hand, with poor recovery from the existing consumers.

MSEB's move would seriously hamper the implementation of captive projects with a total capacity of 1,500 MW, cleared during the previous Shiv Sena-BJP alliance government in early 1995. So far captive plants with a capacity of 773.493 MW, which represents 15 per cent of the total connected load of 4,508 MW for high tension consumers, are operational in the state.

MSEB sources told The Financial Express that as per the present tariff structure, most of the cross-subsidy is provided by the industrial sector, which facilitates it to discharge social obligation by way of prescribing subsidised tariff to certain categories of consumers. "If the Board would continue to allow industries to set up their own captive power plants, thereby ceasing purchases from it, the MSEB would be unable to continue subsidising various categories of consumers, leave alone earning the statutory revenue return," the sources said.

MSEB sources said that the present captive power generation policy would have an adverse impact on the financial credibility of the Board and its ability to repay loans, further investment in power structure and consequently on the development of the state.

Furthermore, the growth in high tension consumers has slowed down considerably in the recent years. The recessionary trends in the industry have further compounded the problem of slow growth of consumption and additions in this category.

Ironically, MSEB has to resort to load shedding occasionally, due to system constraints. However, the Board tries to ensure that areas with predominantly industrial load are excluded from the load shedding programme to the extent possible.