This Memorandum of Understanding made between Ministry of Power, Government of India and the Government of Maharashtra to affirm the joint commitment of the two parties to reform the power sector in Maharashtra and to set out the reform measures which Govt. of Maharashtra will undertake and Govt. of India will support.

I. PREAMBLE:

The Govt. of Maharashtra is committed to a time bound reform programme in the power sector in Maharashtra. The objectives of the reform programme are to promote development of an efficient, commercially viable and quality power supply industry which provides reliable and quality power at reasonable prices to the consumers.

The Government of India is committed to support the process of reforms in the power sector in Maharashtra. The objective of this agreement is to identify the weaknesses of the power sector in Maharashtra and adoption of appropriate remedial measures,

• To reduce the gap between the demand and supply through short and long term measures, expeditious commissioning of projects, Demand Side Management, R&M program and through reduction of the technical , commercial & T&D losses.
• To strengthen the Electricity Regulatory Commission, rationalisation of tariff structure and measures to ensure commercial viability.

i) Govt. of Maharashtra (GOM) will enact an appropriate legislation for expediting Reforms.

ii) GOM will achieve break even in distribution operations by 31st March, 2003 and positive return thereafter. For this purpose the GOM will ask the Maharashtra State Electricity Board (MSEB) to undertake Energy Audit and Energy Accounting at all levels to promote accountability and reduce transmission and distribution losses and bring them to the level of 18%. This will be achieved by taking following measures.

¨ Meters on all 11 KV feeders would be installed by 31-12-2001.

¨ 100% metering on the LT side of distribution transformers – starting with the identified circles by 31st December, 2001.

¨ 100% metering of all consumers to be targeted for completion by 30th September, 2002.

¨ Computerised billing at Sub-Divisional level by March 2003.

¨ Formation of profit centres in Generation, Transmission & Distribution by 30th June, 2002.

¨ Development of an effective distribution Management Information System.

iii) Government of Maharashtra will introduce time of the day metering for HT Consumers for demand side management and flattening of demand curve.

iv) State Govt. will give full support to the State Electricity Regulatory Commission to discharge its statutory responsibilities. Tariff orders issued by SERC will be implemented fully unless stayed or set aside by court orders.

v) Government of Maharashtra will ensure timely payment of subsidies required in pursuance of Government of Maharashtra’s orders on the tariff determined by the SERC.

vi) Government of Maharastra will take action to improve availability of its thermal generating plants from 80% to 85% by 2005.

vii) MSEB will identify areas with low power factor loads and high agricultural consumption for installation of capacitors in transmission and distribution system.

viii) Government of Maharashtra will securitise outstanding dues of CPSUs as per scheme approved by Government of India. After the securitisation Government of Maharashtra will ensure that CPSU outstanding does not cross the limit of 2 month’s billing.

ix) Maharashtra will maintain grid discipline, comply with grid code and carry out the directions of Regional Load Despatch Centre.

1. Additional allocation of power :

Government of India will allocate additional power from the unallocated share of Central Pool subject to Maharashtra demonstrating the capacity to pay for the power.

2. R&M and Life Extension Programme (LEP) of Generating Stations

In order to improve the operational efficiency, reliability and availability, it has been decided to undertake R&M and Life Extension Program of Thermal, Gas and Hydro Power Stations of MSEB. Financial support will be provided by Government of India through APDP/PFC on submission of project proposals for various schemes. Through R&M/LT and better O&M practices MSEB will improve PLF & availability and reduce heat rate and auxiliary consumption of generating stations in a manner which can result in quantifiable benefits.

3. Capacity Addition Program

MSEB will explore the possibility of setting up of 2x210 MW units in Khaperkheda Power Station (Expansion).

MSEB will explore the possibility of setting up of Parli TPS (Expansion, 250 MW), Paras TPS (Expansion, 250 MW), Bhusawal TPS (Expansion, 2x500 MW), and Uran GTPS Expansion (400 MW) project. Government of India will extend help in arranging funds and other clearances for the implementation of these projects.

4. MSEB will identify and undertake the implementation of critical transmission links and augmentation of transformation capacity in the system for better power dispersal, utilisation and enhancement of security of the grid. GOI/PFC will help in arranging funds for the purpose.

5. Energy Conservation And Demand Side Management To Reduce Peak Demand

MSEB will undertake energy conservation measures and demand side management to reduce peak demand by identification of consumer load mix, demand pattern, diversity in demand and rationalisation of tariff structures. This would be achieved by engaging consultants for which GOI will help MSEB in arranging funds.

6. Management Information System (MIS)

MSEB will develop a distribution Management Information System. It is proposed to establish local area networks in all offices up to division level. Connectivity will be provided up to division level to form intranet within MSEB. PFC will consider financing the scheme on submission of a commercially viable project.

• The above is the broad understanding reached between Government of India and Government of Maharashtra. The Modalities of detailed implementation, shall be worked out jointly.
• Implementation of the Memorandum of Understanding would be monitored every three months.
• This Memorandum of Understanding will be valid for a period of five years, and will be subject to review annually.
• Through this Memorandum of Understanding both parties affirm their commitment to fulfil the reform activities and achieve the objectives mutually agreed upon in this Memorandum.

Signed this day the 16th of March, 2001 at New Delhi.