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Home News Power Sector News Despite non payments, Maharashtra to hand over more cities to franchisees

Despite non payments, Maharashtra to hand over more cities to franchisees

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MSEDCLEven though existing franchisees like SPANCO are not paying back money, MSEDCL has floated a franchisee tender for Shil-Mumbra-Kalwa area (near Thane) and intends to franchise out more cities.Though the Maharashtra State Electricity Distribution Company Limited (MSEDCL) has put its franchisee Spanco on notice for non-payment of dues and less payment through escrow mechanism, the possibility of termination of latter's contract is bleak. A clear indication is that in spite of non-payment of dues of over Rs 200 crore, MSEDCL has not encashed the Rs 50 crore bank guarantee of Spanco.

If it terminates Spanco's contract, then few companies are likely to evince interest in franchisee bids. A senior MSEDCL official claimed that franchisee model was the only way to quickly reduce losses in urban areas. "Spanco is facing problems with payment but GTL has reduced its dues to a large extent while Torrent is doing well in Bhiwandi. We are confident that Spanco, too, will pay up sooner or later as we are no longer lenient with it," he said.

The official further said franchisee model was being promoted by the central government. "Uttar Pradesh government has franchised out Agra's power distribution. Madhya Pradesh has appointed franchisees in Gwalior, Ujjain and Sagar. This is a new model and is bound to have teething troubles," he added.

MSEDCL had terminated two contracts of Spanco - agricultural feeder separation and R-APDRP - in the last two months. The official denied this had anything to do with failure of Spanco to pay up in Nagpur.

Meanwhile, in view of non-payment by franchisees, MSEDCL has revised the tender for Shil-Mumbra-Kalwa making it mandatory for the successful bidder to deposit six months average collection with the company before taking over. However, power experts feel this condition would have to be waived off or the amount reduced, otherwise no company may bid.


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