MSEB to set up its own finance corporation to fund projects

Pune, Nov 22 | Updated: Nov 23 2005, 06:41am hrs
The Maharashtra State Electricity Board (MSEB) has decided to set up its own state power finance corporation to fund generation projects. The board plans to add 2000 mw capacity which would need an investment of Rs 8,000 crore.

The issue is of raising resources. Even at 80% debt levels we will need to raise the remaining 20%. We propose to form our own state finance power corporation to raise funds equity and bonds for the projects, MSEB chairman Jayant Kawale said.

He was speaking at the Maharashtra State Council meeting at CII on Tuesday. He also hinted at the possibility of industrial tariffs going up. MSEB will be submitting its aggregate revenue requirement by November 30 to the regulator. There is some scope for increasing tariff, Mr Kawale said.

The state government has signed MoUs with private players for generating 12,500 mw. There is a huge gap between signing of MoUs and getting power and in the last six months detailed project reports of only 4,000 mw have been submitted to the government, he said. So MSEB would have to step in and add to the generation capacities.

MSEB had plans to set up two gas-based projects at Uran and Talegaon but these have now been pushed back because acute shortage and price volatility. So MSEB is now concentrating on another set of projects which are coal-based at Khaperkheda, Chandrapur and Bhusawal, he said.

Demand for power in Maharashtra is picking up at a great speed with demand going up from 12,000 MW last year to 15,000 MW this year. Kawale said the gap was slated to grow to 10,000 MW by 2010 and the MSEB is seriously looking at filling the gap by various means and it has formulated a plan to spend Rs 5,000 crore in the next five years. Kawale said the state should get 740 MW from Phase II block one of Dabhol by May 2006 itself which will be based on naphtha if the central government provided tax concessions.

Punes demand for peak power, which is now hovering around 700 MW, set to explode to 1,400 MW in the next five years thanks to IT expansion, mushrooming of shopping malls and increasing demand from industry, he said. Pune will see an investment of Rs 1,000 crore to improve power supply. This is for upgrading the circular grid from 230 kv to 400 kv and would involve an investment of Rs 150 crore which has been tied up with the Power Finance Corporation. Another Rs 850 crore would being pumped into upgrading distribution for which it is also involving the private sector. It has asked for expression of interest from private parties for franchisees to distribute power and is pilot testing a project in Bhiwandi.

The board is also giving serious thought to the CII proposal or using unutilized captive power of large industrial units to reduce peak load and load shedding for retail consumers in Pune. It is also pushing for MIDC to set up group captive power plants, typically the size of 230 mw, along with industry to ease the power shortage situation.