Also called Mahavitaran, the state government-owned power distributor will be split into two entities, with one taking over electricity supply to the farm sector along with ₹75,000 crore in outstanding dues from farmers, Lokesh Chandra, the chairman and managing director of MSEDCL, said. This company will continue to remain private. The second unit, which will keep the profitable business of supplying power to residential and industrial consumers, will be listed on the stock exchanges, said Chandra, a bureaucrat from the 1993 batch of the Indian Administrative Service.
To pitch itself as a lucrative opportunity to investors, the company is relying on the growth prospects of Maharashtra, which aspires to become a $1 trillion economy by the turn of the decade, from about ₹49.3 trillion ($549 billion) projected by the government for FY26.
“We are the largest distribution company (in India). We have a revenue of 1,30,000 crore, which is going to almost double in next five years," Chandra said. The company aims to tap into Maharashtra's growing industrialisation, including by competing with independent power producers to supply electricity to big power-guzzlers like data centres, he said.
Meanwhile, the company is eyeing capital infusion from the state to help manage part of its ₹98,000-crore debt burden, Chandra said. The remaining debt will be split between the agricultural enterprise and the listed entity in a way that both operations remain financially viable, he said, without disclosing how much debt each entity will take on, and how much capital the state government will inject.
Once the agricultural power distribution is carved out, MSEDCL will have tariff collection efficiency upwards of 99%, Chandra said. Transferring the ₹75,000 crore of uncollected tariff from agricultural users to the carved-out entity will also clean up MSEDCL’s books, he said.
Increasing contribution of renewable energy—from 13% at present to 52% by 2030—will ensure that power procurement cost comes down too, he said. Lastly, the restructuring would mean that commercial and industrial consumers would no longer be cross-subsidizing the sale of power to the agricultural sector, further reducing the fiscal strain on MSEDCL.
“From a loss-making company, we are going to convert this company into a dividend paying one," Chandra said.
In an innovative solution to minimize the cost of state-subsidized power for agriculture, MSEDCL has given out tenders for 16 GW of relatively small-scale solar power assets distributed across existing sub-stations. As these are solar plants and won't require new distribution infrastructure given their smaller size and location near the existing sub-stations, they will provide electricity at a significantly lower price compared to MSEDCL’s current procurement cost. This power will then be distributed to agricultural consumers during the day time. Excess power will be stored in energy storage systems and traded on exchanges during hours of peak demand after sunset.
This will minimise the state’s cost of subsidizing electricity while eliminating the cross-subsidy burden on existing consumers.
Solar power is more suited for the farm sector, as it doesn't require round-the-clock electricity, unlike industrial consumers. Daytime supply during the limited solar power generation window will be sufficient for the sector, policymakers believe.
MSEDCL will be the first distribution company in India to experiment with this model. It will also be the first to head for the public markets. About 3.5 GW of the planned 16 GW of solar capacity is already operational, with the remainder set to come on stream in 18 months, Chandra said.