India’s discom losses down to ₹38,000 crore in 2019-20: Raj Kumar Singh

The losses of state-owned electricity distribution companies (discoms) have dropped sharply by more than a third to Rs38,000 crore in 2019-20 from ₹61,360 crore in FY 19, said union power and new and renewable minister Raj Kumar Singh on Friday.

While launching the Ninth Annual Integrated Rating for State Power Distribution Utilities, Singh who is spearheading the government’s efforts to ensure 24X7 power for all, and the green energy push said that the gap between the cost of electricity bought (ACS or average cost of supply) and supplied (ARR or average realizable revenue) has also come down.

In a related development, five state distribution utilities of Gujarat and Haryana have topped the latest power ministry ratings for parameters such as operational, financial, regulatory and reform measures across 41 discoms spread across 22 states.

The annual exercise for state power discoms is aimed at helping banks and financial institutions assess risk while lending to the distribution utilities. These rankings for FY20 assume importance for discoms given that it will impact their borrowing from the state-owned financial institutions including PFC and Rural Electrification Corp. Ltd (REC), the largest lenders to the Indian power sector whose prudential norms have been tightened by the government.

It works like this. Higher a ranking a discom has, better will be the terms at which it will be able to access finance. This in turn will help instill financial discipline at discoms.