Mumbai: The state government will take over ₹32,679 crore of MSEDCL’s borrowings that were earlier guaranteed by the government, providing a major financial relief to the state power distribution utility. According to a government resolution (GR) issued on Tuesday, the move will see the state government reduce MSEDCL’s arrears from approximately ₹60,000 crore to ₹26,848 crore in a single stroke. These arrears relate specifically to unpaid power supply bills in the agriculture sector.
MSEB Solar Agro Power Ltd created
The decision is part of a broader set of measures aimed at stabilising the finances of the utility. As part of this restructuring, a separate entity, MSEB Solar Agro Power Ltd, has been created to handle power supply to the politically sensitive agriculture sector.
To finance the takeover of the ₹32,679 crore debt, the government plans to issue bonds of an equivalent amount with a 15-year tenure to repay lenders. This offloading of debt is expected to substantially improve MSEDCL’s balance sheet. The GR also highlights that the state is leveraging a Central government provision that allows additional borrowing of up to 0.05% of Gross State Domestic Product (GSDP) to provide further financial support to the power sector.
Additionally, the state cabinet has approved the supply of cheaper power sources to the new agriculture-focused entity. This includes solar energy generated under the Mukhya Mantri Solar Krishi Vahini Yojana (MSKVY), other solar sources and nuclear power to ensure sustainable supply to farmers.
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