Power minister says inefficiency in state discoms a barrier in investment; check how much loss they suffer

By: |
December 14, 2020 2:51 PM

Inefficiency in billing and collection is the major reason for losses in the distribution companies.

power sector, discoms, distribution companies, investment, discom lossesThe losses of discoms stood at Rs 33,894 crore in FY17, Rs 29,452 crore in FY18, and jumped to Rs 49,623 crore in FY19.

Power minister R K Singh today said that inefficiency in billing and collection is the major reason for losses in the distribution companies. R K Singh added if this inefficiency is taken care of, every discom will make profits. Speaking at the 93rd edition of FICCI AGM, he further said that the investment will not come unless there is viability in the system. The power minister also underlined that India is the fastest-growing Renewable Energy capacity in the world and has emerged as the most attractive destination for investment in the renewable sector. 

The losses of discoms stood at Rs 33,894 crore in FY17, Rs 29,452 crore in FY18, and jumped to Rs 49,623 crore in FY19, according to the data provided in Lok Sabha. There are several reasons for discom losses, which include high AT&C losses; tariffs not being reflective of costs; uncovered revenue gaps; payment of subsidies by State not in accordance with announcements, etc, R K Singh had said in Lok Sabha. 

However, in an effort to alleviate the problems faced by the power distribution companies due to low power consumption during the lockdown, the government had infused liquidity of Rs 90,000 crore in the power sector through Power Finance Corporation and Rural Electrification Corporation as a part of Aatmanirbhar Bharat Abhiyan. The government had also proposed amendments in the tariff policy with the key focus being on ensuring the sustainability of the power sector, encouraging competition, addressing environmental concerns, performance improvement, efficiency, and accountability of the distribution sector in addition to other issues.

Meanwhile, the minister underlined that he is worried about the sustainability of discoms because a large number of such companies are loss-making. He highlighted that none of the private-owned discoms are loss-making as their aggregate technical and commercial (AT&C) losses are below the norm. Regarding the inability to pay for the power supply, he said that it is causing stress upstream and dampening investment.

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