Powering progress

Power distribution companies (discoms) have improved performance in some parameters, though challenges remain, according to the latest annual government review of the sector.

The 12th Annual Integrated Rating and Ranking of Power Distribution Utilities from the power ministry analysed the performance of 42 state-run and 13 privately-run power distribution companies. A larger share of the private players had higher grades. Over 60 per cent of private players were grade A or above, compared to just over 20 per cent of state-run companies (chart 1).

Distribution companies are more likely to bill for the power they supply and collect money more efficiently than a couple of years ago (chart 2).

Transmission wastage and nonrealisation of billed amounts had previously led to major losses, which increased debt for discoms. The government launched schemes to curtail these losses and improve discom performance. Under one such scheme, the Revamped Distribution Sector Scheme, the government has set a target to reduce the technical and commercial losses (AT&C losses) to 12-15 per cent, and the difference between the cost of power and realised revenue to zero by 2024-25. Nearly half of discoms continue to have AT&C losses of more than 15 per cent. The gap between the average cost of supply and the average revenue realised has widened to 55 paise per unit (charts 3,4).

This was driven by a 15 per cent increase in the cost of power, largely due to increased coal imports and higher energy prices due to geo-political tensions (chart 5). An acceleration in renewable adoption could help bring down dependence on fossil fuels besides meeting green goals. Some progress is already visible in this regard.

Despite rising electricity demand in the last five years, increases in the emissions from the power sector have slowed down (chart 6).