Power ministry says discoms’ projected ₹90,000 cr loss grossly inflated

The union power ministry on Wednesday refuted reports about electricity distribution companies (discoms) recording losses of ₹90,000 crore in the financial year 2020-21, terming it ‘grossly inflated.’

“Recently, some media reports have published speculations regarding DISCOMs achieving loss levels of ₹90,000 crore in FY2021. These speculations trace their origins to a report published by ICRA on the Power Distribution Sector in March, 2021,” the union power ministry said in a statement.

This comes in the backdrop of discoms traditionally being the weakest link in the electricity value chain, plagued by low collections, rise in power purchase cost, inadequate tariff hikes and subsidy disbursement, and mounting dues from government departments.

“While this report indicates Profit After Tax (PAT) figures of negative ₹50,000 crore in FY19 (which is consistent with the PFC’s Annual Utilities report of FY 2019), the projections of PAT figures of FY 2020 are shown to increase to the tune of negative ₹60,000 crores. This report further builds on these losses and projects total DISCOM losses of ~ ₹90,000 crore in FY2021. One of the reasons ascribed to this speculation is the decline in electricity volume sales in the year 2020-21 due to the COVID induced lockdown,” the statement added.

While the demand load shifted to homes during the first wave of the coronavirus pandemic, the demand has since recovered, with India’s peak power demand recording an all time high of 200.57 gigawatt (GW) on 7 July. India has an installed power generation capacity of 383.373GW.