Announcing this at a workshop on "power distribution reforms", the state minister for power Padmasinh Patil said that PFC which has already agreed to provide techno-economic and financial support, will appoint a team of consultants to assist the proposed study group. According to him, such a study was needed to decide the exact nature of power sector reforms and the need of the sector in the coming years.

Patil said that the present monolithic organisation of the electricity board will be unbundled based on the functions of generation, transmission, distribution and retail supply. He announced that separate legal entities could be established to look after each of the unbundled functions.

The minister said that with unbundling of SEB activities, there will be a number of utilities operating in the state which will be limited companies incorporated under the Companies Act 1956. With this, there will be change in pattern of ownership and management of the electricity board, a statutory body under the Supply Act, 1948, to a limited company. "Eventually, each of the corporatised entities could be privatised depending on the policy of the state government," he added.

Patil said that the issue of ownership needs to be looked at in the context of "our ability to regulate the power sector in terms of taking and implementing rational decisions for safeguarding consumer interests and long term national interests".On one hand, the anti-privatisation position overlooks the present inefficiency and leakages in the SEBs and blames the crisis only to unremunerative tariffs and subsidies to agriculture sector. On the other, the pro-privatisation position strives to demonstrate that SEBs under public ownership can never work efficiently and the growing needs of power sector cannot be met without privatising them.

"Thus, the crux of this debate lies in answering the question whether the long term costs involved in continued inefficiency and leakages in SEBs are more or the costs involved in bad privatisation are more," he added.

Patil admitted that the financial position of MSEB is deteriorating and the future development of power sector cannot be sustained without a viable board and improvement in operational performance of MSEB. Future expansion and improvement of power sector alone cannot be fully achieved through public resources alone as it is essential to encourage private sector participation in transmission and distribution.

MSEB chairman Asoke Basak called for delegating wide ranging powers to disconnect power connections in the state for the recovering of mounting dues which has rose from Rs 1,641 crore in 1995 to Rs 3,649 crore in 1999. He stressed the need for a political will for this purpose.

He also called upon the Centre to sign a memorandum of understanding with the SEBs to achieve efficiency parameters. He added that such a mechanism can be worked out as the power sector reforms will go on till next six years.