NEW DELHI: Power distribution companies in the private and public sectors have staged a smart turnaround, reporting a combined profit of over Rs 2,700 crore in 2024-25, as against losses of Rs 25,553 crore in the previous year, govt said on Sunday.Power ministry officials attributed this to improved performance by state-run power utilities. “If we look at the last three financial years, private distribution companies have been posting profits, which went up further in the last financial year. The positive profit after tax in 2024-25 is the result of a sharp decline in losses of state-run power discoms,” said a senior power ministry official.The Centre said infrastructure modernisation and accelerated smart metering, prudent tariff structures and the transparent accounting of subsidies to ensure full recovery had aided the performance of discoms. Providing for subsidies is seen to be critical as state after state is announcing free power for consumers up to a certain level, and in the absence of money being set aside in the budget, discoms have to bear the burden.Additional measures – such as introducing uniform accounting and greater transparency across distribution utilities to improve financial governance, enforcing legal contracts through timely payments to support investment in new renewable energy projects and incentivising states to implement critical power sector reforms by linking borrowing limits to performance metrics under the additional borrowing scheme – also contributed to the improved financial performance, govt said.
The impact of these reforms is evident not only in the bottom lines but also in other performance indicators, including a reduction in aggregate technical and commercial (AT&C) losses and a narrowing gap between the average cost of supply and the average revenue realised, the ministry said.AT&C losses, a key parameter of efficiency, have reduced from 22.6% in 2013-14 to 15% in 2024-25, an official statement said. Reforms such as late payment surcharge rules led to a 96% reduction in outstanding dues to generating companies, from Rs 1.4 lakh crore in 2022 to Rs 4,927 crore by Jan 2026, while reducing payment cycles from 178 days in 2020-21 to 113 days in 2024-25, it added.Sambitosh Mohapatra, partner at consulting firm PwC India, said the return of some state discoms to profitability should be seen as a structural inflection point rather than an accounting exercise, driven by improved billing efficiency, lower AT&C losses, better subsidy discipline and selective tariff rationalisation.Yet, there is a long way to go for the discoms, which had accumulated losses of Rs 6.8 lakh crore in 2022-23. Besides, regulatory assets, due to insufficient pass-through of costs, were estimated at over Rs 3 lakh crore, mainly in states such as Tamil Nadu, Rajasthan, Uttar Pradesh, Maharashtra, Delhi and West Bengal.Anujwsh Dwivedi, partner at Deloitte India, said from a financial sustainability perspective, resolving the outstanding debt pile of over Rs 7 lakh crore in state-owned discoms is the most significant challenge facing the sector. Go to Source
