Discoms Turn Profitable, Post Rs 2,700 Crore Combined Profit In 2024–25

New Delhi, Jan 19 (KNN) Power distribution companies across the public and private sectors posted a combined profit of over Rs 2,700 crore in 2024–25, reversing losses of Rs 25,553 crore a year earlier, the government said. Officials attributed the turnaround largely to improved performance by state-run utilities. 

Reforms, Smart Metering Drive Improvement

The Centre said measures such as infrastructure upgrades, faster smart meter deployment, rational tariffs and transparent subsidy accounting have improved discom finances. 

Clear budgetary provisioning for subsidies, including free power schemes, has eased the strain that earlier weighed heavily on utilities, reported The Times Of India.

The government said steps including uniform accounting norms, greater transparency in financial reporting and stricter enforcement of contracts through timely payments have aided the turnaround. Linking states’ borrowing limits to power sector performance has also encouraged reforms.

Efficiency Gains and Lower Losses

The ministry said the reforms have delivered gains beyond profitability, with operational performance also improving as Aggregate technical and commercial (AT&C) losses declined from 22.6 percent in 2013–14 to 15 percent in 2024–25.

Late payment surcharge norms have cut outstanding dues to power producers by 96 percent, from Rs 1.4 lakh crore in 2022 to Rs 4,927 crore by January 2026, while average payment cycles improved from 178 days in 2020–21 to 113 days in 2024–25.

Experts See Structural Shift, But Challenges Remain

Sambitosh Mohapatra, partner at PwC India, described the profitability rebound of certain state discoms as a structural turning point rather than a simple accounting outcome. He credited the improvement to enhanced billing efficiency, lower AT&C losses, disciplined subsidy management, and targeted tariff rationalisation.

Experts warned that substantial challenges remain, noting that discoms had amassed losses of Rs 6.8 lakh crore in 2022–23. Additionally, regulatory assets due to inadequate cost pass-through are estimated at over Rs 3 lakh crore, especially in states like Tamil Nadu, Rajasthan, Uttar Pradesh, Maharashtra, Delhi, and West Bengal.

Anujwesh Dwivedi, partner at Deloitte India, said that the key financial sustainability challenge continues to be addressing the over Rs 7 lakh crore debt accumulated by state-owned discoms.

(KNN Bureau)