Nagpur: Despite having one of the highest power tariffs in the country, with rates reaching up to Rs 17.81 per unit for domestic consumers, Maharashtra’s state-owned electricity distribution company, MSEDCL, is burdened with Rs 89,300 crore in pending dues from various consumer segments, according to a report.
A comparison of arrears since 2020 reveals a staggering 50% increase in unpaid dues as of April 2024. Farmers owe the largest portion, with Rs 66,000 crore in arrears, followed by the real estate sector, which has pending dues exceeding Rs 10,000 crore from under-construction sites.
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Farmers are charged a highly subsidized rate of Rs 3 per unit to power their irrigation pumps, with the State Government covering part of the cost, while the rest is cross-subsidized through higher tariffs imposed on other categories of consumers, the report mentioned.
The mounting unpaid bills are creating a significant deficit in MSEDCL’s revenue, which directly impacts the calculation of tariffs. To manage operational costs, the company has had to rely on borrowing, which in turn increases its interest burden, ultimately affecting tariff rates. MSEDCL’s total loan burden now stands at over Rs 25,000 crore, according to a source from its Board of Directors.
The farmers, on the other hand, blame MSEDCL for erratic supply and botched billing, which prompts them to withhold payment. A farm activist and former Chairman of Vasantrao Naik Shetkari Swavalamban Mission (VNSSM) — a state government agency on farm crisis — says farmers’ dues have now become an unrecoverable amount. The government should consider waiving the arrears. “Farmers do not get the bills on time, and the connection is snapped for non-payment when they need it the most. Tariffs for agricultural supply are much lower in other states,” he said.
After farmers, the real estate sector has the highest dues at more than Rs 10,000 crore as of April 2024. A separate meter is allotted for construction sites. The realtors go for a fresh connection after the building is completed. The meter for the under construction site is disconnected and dues remain unpaid, explained an MSEDCL source. Industries have pending dues of Rs 1,900 crore.
MSEDCL is banking on its solar power plans to deal with the farmers’ dues and rationalise tariff. The state government has already announced in the budget that farmers will be provided free electricity for running irrigation pumps up to a capacity of 7.5 HP. Now, private solar power stations across the villages will further add to benefit, said the report.
The plan is to have privately run solar power stations with a total capacity of 16,000 MW across villages, for which land will be provided by the state govt. The first power station, with a capacity of 3 MW, became operational last week in Chhatrapati Sambhaji Nagar district (formerly Aurangabad).
Tenders have been issued, and power purchase agreements (PPAs) have been signed for similar stations having a total capacity of 9,000 MW so far. As much as 4,000 MW will be available by the end of the financial year. MSEDCL will get solar power at Rs 3.10 to Rs 3.30 a unit. Buying power from the solar stations will reduce the average procurement cost of MSEDCL by one rupee a unit. The benefit will be passed on to non-farm consumers, the report said.
