Reversing years of losses, power distribution utilities see 2,701 crore profit in FY25

Reversing “several years” of losses since unbundling and corporatisation of State electricity boards, India’s power distribution utilities, that is DICOMs and power departments, collectively posted a net profit, or profit after taxes (PAT), of ₹2,701 crore in the financial year 2024-25, the Union Ministry of Power informed Sunday.

Also Read | India considering $12 billion plan to bail out State power distributors

For context, the utilities combined had incurred a loss of ₹67,692 crore in FY 2013-14 before trimming them to ₹25,553 crore in FY 2023-24.

Reflecting on the development, Union Minister for Power Manohar Lal, stated, “This marks a new chapter for the distribution sector and is a result of several steps that have been taken to redress the concerns of the distribution sector.”

The ministry further held that distribution utilities have also accrued an improved show across all performance indicators. The Aggregate Technical and Commercial (AT&C) losses, which is an indicator of losses because of technical inefficiencies, theft, billing inefficiencies, and commercial losses combined, has reduced to 15.04% in FY 2024-25 from 22.62% in FY 2013-14.

Additionally, the difference between the average cost of supply and the average revenue realised (ACS-ARR), has also narrowed from ₹0.78/kilowatt-hour (FY 2013-14) to ₹0.06/kilowatt-hour (FY 2024-25). A lower cost-revenue gap indicates lower operating loss for discoms with increased ability to recoup their costs.

Further, the Ministry stated the Electricity (Late Payment Surcharge) Rules have contributed to a 96% reduction in outstanding dues to generating companies. It has come down to ₹4,927 crore until January this year from approximately ₹1.35 lakh crore in 2022.

The rules have also brought down distribution utility payment cycles, in other words, billing and payment schedules, to 113 days in FY 2024-25 from 178 days in FY 2020-21.