In 2000, and underpinned by the Electricity Act 2003, the Madhya Pradesh state government initiated a series of major power sector reforms. The long-term objectives of these reforms were to make the sector financially sustainable, remove subsidies, reduce power theft, achieve full electrification, augment generation and network capacity, increase private sector participation, and move towards full retail competition. To deliver against the objectives, the former Madhya Pradesh State Electricity Board (MPSEB) was split into five wholly state-owned government companies: a generating company, a transmission company, and three distribution companies. A separate publicly owned company was subsequently incorporated to handle bulk power sales and purchases. Two public sector entities were later created under the state government's New and Renewable Energy Department specifically to develop renewable energy projects in Madhya Pradesh: (i) Madhya Pradesh Urja Vikas Nigam Limited, which is responsible for the development of small-scale renewable energy projects; and (ii) Rewa Ultra Mega Solar Limited (RUMSL) which is responsible for the development of large-scale renewable energy parks. The state electricity regulatory commission was established in 1998 and has issued tariff and other orders since 2004. The government has made good progress in achieving these objectives with the exception of financial sustainability in the distribution subsector. To address these residual challenges, the state is participating in the central government's Revamped Distribution Sector Scheme with the objective of improving the quality, reliability, and affordability of power supply to consumers and implementing various measures such as installing smart meters, asset mapping, energy accounting per feeder and have specific targets for loss reduction and revenue realization.

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