Financial losses of the state-run power distribution companies (discoms) decreased 37.8% annually to Rs 38,093 crore in FY20, the latest performance audit by Power Finance Corporation (PFC) said.

Improved subsidy disbursal by the state governments and efficient billing by the discoms helped in narrowing the gap between the average cost of supply and revenue realised (ACS-ARR gap), leading to lowering of losses. The ACS-ARR gap of discoms reduced from Rs 0.49/unit in FY19 to Rs 0.30/unit in FY20, despite average power purchase cost increasing from Rs 4.64/unit to Rs 4.73/unit in the same period.

However, the report reflects the performance of the discoms before they were impacted by the pandemic. Experts have pointed that discoms’ revenues may have significantly dropped in FY21 with demand from high-paying industrial and commercial consumer segments getting disrupted amid the lockdowns to contain the coronavirus.

While energy sold by discoms registered a year-on-year growth of 1.96% to 1,020 billion units in FY20, revenue increased by 4.52% during the same period to Rs 6.53 lakh crore in FY20, indicating better revenue realisation. The aggregate technical and commercial (AT&C) losses — an indicator of pilferage —for discoms at the national level improved from 21.74% in FY19 to 20.93% in FY20, as billing efficiency increased from 83.91% to 85.36% in the same period.

State governments released 94.65% of the subsidy booked by their respective discoms in FY20, significantly higher than the 89.21% released in FY19. Discoms in Gujarat recorded the highest profit of Rs 1,023 crore in FY20, followed by Haryana (`331 crore), Chandigarh (Rs 179 crore), Mizoram (Rs 175 crore) and Assam (Rs 151 crore). Tamil Nadu, at `19,684 crore, registered the highest losses among discoms in the fiscal, followed by Rajasthan (Rs 12,277 crore), Telangana (Rs 6,966 crore), Maharashtra (Rs 6,834 crore) and Madhya Pradesh (Rs 5,762 crore).

A report released by Icra in March had indicated that discom losses have increased to Rs 90,000 crore in FY21. Subsequently, a report co-authored by NITI Aayog and energy think tank RMI released in early August has also estimated the loss figure to be at similar levels. However, the power ministry has termed such estimates as “grossly inflated”. Analysts at Crisil have pointed that discom losses will be 40% higher in FY22 than in FY20.