India’s largest power distribution utility, Maharashtra State Electricity Distribution Co Ltd (MSEDCL), is planning to refinance at least 50% of its ₹98,000-crore debt as part of a broader balance-sheet overhaul ahead of a proposed initial public offering (IPO) within the next 12 months, managing director Lokesh Chandra said in a recent interview.
To strengthen its financial position ahead of the listing, the utility has already raised ₹12,800 crore from State Bank of India (SBI) to replace high-cost borrowings with loans at more competitive interest rates.
Debt Pressure and Agricultural Arrears
The restructuring effort is aimed at easing MSEDCL’s annual debt-servicing burden of around ₹12,000 crore, which has been compounded by agricultural dues amounting to nearly ₹75,000 crore, Chandra said.
Despite the strain from unpaid farm-sector dues, the company’s non-agricultural operations remain profitable. To address this imbalance, MSEDCL plans to de-merge its agriculture business by March 2026.
Revenue Mix and Consumer Base
MSEDCL serves over 3 crore consumers, including railways and other public services. In FY25 (provisional), its revenue contribution was led by:
- High-tension industrial consumers: 33.4%
- Domestic consumers: 20.9%
- Agriculture: 16.7%
- Commercial users: 11.1%
- Low-tension industrial consumers: 8.3%
The remaining revenue came from public services and other categories.
Agriculture Business De-merger Plan
The proposed agriculture-focused entity will operate entirely on solar power, running around 45 lakh existing pumps through renewable energy to reduce operating costs. The new company will be structured to ensure it is financially viable from inception.
“At least half of the ₹98,000-crore debt will be refinanced, while the remainder will be shifted to longer-tenure borrowings to ease near-term repayment pressure. Part of this could also be supported through government assistance,” Chandra said.
The refinancing exercise has also freed up revenue streams of nearly ₹50,000 crore that were earlier pledged as collateral under older loan agreements.
Push Towards Renewables
MSEDCL expects cost savings of about ₹66,000 crore over the next five years from lower power procurement costs as it increases the share of renewable energy from 13% currently to 52% of total energy consumption by 2030.
With the growing share of renewables, the utility projects a 2% annual reduction in electricity tariffs, a shift from the historical trend of 9–10% yearly tariff hikes.
Maharashtra aims to become the first state to meet 52% of its energy consumption from renewable sources by 2030. As renewable capacity expands, the contribution of thermal power is expected to decline from around 80% currently to about 45–46%.
Demand Growth and Technology Focus
Electricity demand in Maharashtra is projected to grow at 6–6.5% annually. Beyond raising capital, MSEDCL’s proposed listing is also intended to enhance governance standards and support a transition toward technology-driven operations, including the use of AI tools for load forecasting and real-time grid monitoring.
Source: Moneycontrol
