Mahagenco has invited private players to run its loss-making and aged power plants.
State-owned power generation company Mahagenco has invited private players to run its loss-making and aged power plants. The beleaguered utility on Monday invited expression of interest from private players for “generation franchises on profit-sharing basis for loss-incurring thermal power stations/units of Mahagenco.”
Though the notice, which appeared in various newspapers, did not name the units where it was seeking private participation, a senior company official said it was for the 420-MW Bhusawal and 1040-MW Koradi thermal power plants. Mahagenco reported revenues of over Rs11,000 crore and a net profit of Rs300 crore in the last financial year, with a return on equity (RoE) of 14%.
For the current year, the Maharashtra Electricity Regulatory Commission has given the utility a target to achieve a RoE of 15.5%. Company officials claim the move is aimed at increasing the efficiency of its loss-making power units.
As per the latest available figures, Mahagenco operates 33 units in the state, of which 26 units have crossed the critical age of 25.
Most of the units are running at a plant load factor (PLF) of 60-65%. With such old units, it will not be easy for the utility to consistently achieve such high RoEs and hence the move to bring in private players, the officials reason. Others, however, see the move as allowing a backdoor entry to private players into Mahagenco units.
“The problem is not with the utility but with the equipment and an overhang of a high labour cost,” said RB Goenka, sector expert and member of Vidarbha Industries Association, an industry body largely dependent on the Mahagenco run plants for its members’ power requirements. In fact, unless the equipment are changed or upgraded, it is unlikely even a private player will do any better, he said.
The Bhusawal plant has two units of 210 mw each operating for the last 25 years, while Koradi has seven units, of which four units have been out of operation for more than 18 months. Mahagenco had earlier scrapped two older units each of its Parli and Paras plants.
Maharashtra has a generation capacity of 12,000 mw at present, against a peak demand of 14,000 mw. Of the total generation, Mahagenco contributes 5,000 mw, while 2500- 3,000 mw comes from NTPC and the rest from private players.
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