Maharashtra State Electricity Distribution Company (MSEDCL) is preparing for a restructuring and planned public listing, the first State utility to do, its Managing Director Lokesh Chandra told businessline in an interview. The discom is entering a new phase focused on financial sustainability, renewable energy and operational efficiency. Chandra discusses the State’s decision to carve out a separate agriculture-focused entity, the proposed takeover of ₹32,000 crore of debt by the Maharashtra government, plans for a potential IPO by late 2026, and efforts to reduce losses and expand renewable energy. Edited excerpts:
MSEDCL recently reduced tariffs. What were the key reasons behind this?
Like all other discoms, you have to be financially viable if you want to serve your consumers in a better way. We cannot be a loss-making entity.
The reasons are many, but primarily all distribution companies have problems with recovery from the agriculture sector. Maharashtra has the highest agricultural consumption in the country. We have done significant work to reduce power procurement costs, especially for agriculture.
For the last three years, we have been working on solarisation of agricultural feeders, and that has now started showing results. We have seen the impact in terms of reduced power tariffs in Maharashtra.
Around 30 per cent of our consumption is from the agriculture sector, which is the highest in the country. The solar capacity required for this is about 16 GW. Out of that, 5.5 GW has already been commissioned and, by March 2027, we expect 100 per cent commissioning.
The primary reason for tariff reduction is that solar power is available at around ₹2.80-₹2.90 per unit, whereas the average power procurement cost from thermal and other sources is around ₹5.50 per unit.
There will be up to 26 per cent reduction in tariffs in domestic category and up to 8 per cent reduction in Industrial category by FY30.
Tell us about the restructuring of MSEDCL and the creation of separate entities
When we filed the tariff petition, the Commission suggested that there should be a separate company for agriculture. The government accepted that recommendation and the notification has already been issued.
From April 1, we have two entities. One is Maharashtra Solar Agro Corporation and the other company will serve non-agricultural consumers.
The government has also taken a conscious decision to take over some of the debt of the company — around ₹32,000 crore.
For financial viability, the most important thing is that debt should be sustainable. If you have unsustainable debt, you fall into a debt trap. If you are taking loans to repay loans, that is not a financially sustainable situation.
The Maharashtra government has supported us in this restructuring and we have already started the process.
The third step will be listing the company. So the sequence is: debt restructuring, creation of two companies with separate balance sheets—one focused on agriculture and the other on non-agricultural consumers—and then listing. We have already issued the Request for Proposal for the appointment of merchant bankers.
How much do you plan to raise and when do you expect the listing to happen?
We have not finalised that number yet. First, we need to complete the valuation exercise and discuss the matter with the government.
Our current estimate is somewhere between ₹7,500 crore and ₹10,000 crore.
The final figure will depend on the company’s valuation. There will likely be an offer-for-sale component, but those discussions have not yet been completed.
Depending on market conditions, we expect to list the company by year-end or by March 2027. At present, we are looking at December 2026. The timeline may vary by a month or two because we also have to consider market conditions and the advice of the merchant bankers.
There is no listed State-owned distribution utility. How do you see valuation and pricing?
Electricity is a sector where, if you run the business properly, you will never be in difficulty. Unfortunately, because of issues such as recoveries and commercial losses, utilities sometimes get into trouble.
That is why we have undertaken financial restructuring and the government is taking over part of the debt.
As you rightly pointed out, we do not have historical data for a listed State distribution utility. But we know the value of our assets and we know the strengths we have. We already have certain numbers in mind.
The merchant bankers will help us arrive at the right valuation. We can also look at some private distribution companies operating in urban areas for reference. But we have to start somewhere.
How will the IPO proceeds be used?
The proceeds will primarily be used for network improvement and capital expenditure.
Over the last two years, we have already invested heavily in upgrading the network under the Revamped Distribution Sector Scheme (RDSS).
We have invested around ₹14,000 crore under various programmes.
In addition, we have raised funding from institutions such as REC, PFC, the Asian Development Bank and the Asian Infrastructure Investment Bank.
Most loss-reduction works are already complete. The remaining projects should be completed over the next few months.
How will the debt restructuring work? And post that will there still be debt on its books?
The government’s idea is to take over the debt from banks and financial institutions that have lent to us.
One option under consideration was to issue long-term bonds with a tenure of 10 to 15 years. Under that structure, the principal would be repaid over five years after an initial moratorium period, while interest would be paid during the first 10 years.
The idea was to avoid a large immediate burden on the government’s finances.
The government is also examining the possibility of taking over the debt under existing terms and conditions after discussions with lenders.
The annual outgo under some of these options would be around ₹3,000-4,000 crore.
There will be debt post restructuring, but it will be sustainable debt.
What we have done is examine our annual repayment obligations over the next 15 years. We found that there was bunching of repayments over the next three to four years.
We have already restructured some borrowings and renegotiated repayment schedules with lenders.
The objective is to create a three-to-four-year window during which we can consolidate our earnings and strengthen the balance sheet. After that, repayments should not pose any difficulty.
Importantly, MSEDCL has never defaulted on any payment.
How do you view the proposed Electricity Amendment Bill and the possibility of multiple suppliers operating in the same area?
Competition is necessary. It improves efficiency and ultimately benefits consumers through better service. The proposed changes would allow multiple suppliers to use the same network infrastructure.
However, there are some practical issues that need to be addressed. If multiple licensees operate in the same area, questions arise regarding allocation of losses, theft-related losses, network investments and cost sharing.
We have provided our inputs to the government on these matters.
That said, no distribution company can continue operating inefficiently and expect to survive indefinitely. Competition should encourage all utilities to improve service quality.
After listing, do you see MSEDCL expanding into power generation or trading?
We are looking more actively at power trading.
With the planning we have done, we know that during certain hours we will have surplus power available. The question is how to maximise revenue from that surplus.
We are already doing some of this.
We have also started using AI-based scheduling and forecasting systems.
Last year alone, we saved around ₹800 crore through better planning and scheduling.
Better forecasting reduces penalties and also allows us to buy power when market prices are low and sell power when prices are high.
If distribution licensing is liberalised further, would MSEDCL look at opportunities beyond Maharashtra?
Once the framework is opened up, a utility can apply for licences in other areas as well.
We had previously applied for a licence in Mumbai and have experience operating in an environment with multiple distribution licensees.
Mumbai already has parallel distribution networks through BEST, Tata Power and Adani Electricity.
Ultimately, success depends on efficiency and the ability to provide reliable power at competitive prices. Once there is clarity on the final provisions of the law, we will certainly examine those opportunities.
Do you think this restructuring model can become an example for other states?
Definitely.
We will be the first utility to implement such a model and we believe it can permanently address many of the problems faced by the power sector.
This is not a decision that was taken overnight. We have been working on it meticulously for the last three years.
The core issue was the large amount of power required for agriculture.
Our agricultural feeder solarisation model can be replicated across other states. It allows farmers to receive daytime power, reduces technical losses, improves voltage quality and lowers procurement costs.
We have segregated agricultural feeders and developed solar parks close to substations serving those feeders.
This allows us to integrate large amounts of renewable energy while maintaining grid stability.
We have also incorporated distributed storage so that excess solar energy can be stored and used later during peak demand periods.
The model reduces transmission requirements, lowers losses and improves overall efficiency.
What are MSEDCL’s revenue and profit figures for the year?
Revenue this year is around ₹1.34 lakh crore. Profit is approximately ₹1,210 crore. Last year, profit was ₹487 crore, so there has been a substantial increase.