DISCOMs’ Aggregate Loss Soars to ₹502.81 Billion in FY 2021
The net worth of DISCOMs continues to be negative at ₹441.6 billion
The aggregate losses for distribution companies (DISCOMs) stood at ₹502.81 billion (~$6.11 billion) in financial year (FY) 2020-21, an increase of 66% compared to ₹302.03 billion (~$3.67 billion) in FY 2019-20.
Aggregate losses on tariff subsidy received, excluding regulatory income and revenue grant under Ujwal DISCOM Assurance Yojana (UDAY) for loan takeover, increased from ₹639.5 billion (~$7.77 billion) in FY20 to ₹885 billion (~$10.75 billion) in FY21.
The numbers were revealed in Power Finance Corporation’s (PFC) report on DISCOM performance. The report analyzed all state-owned DISCOMs and major private ones.
The net worth of DISCOMs continues to be negative at ₹441.6 billion (~$5.37 billion).
Total borrowings by DISCOMs increased from ₹5.05 trillion (~$61.43 billion) in FY20 to ₹5.86 trillion (~$71.3 billion) in FY21. Overall Aggregate Technical and Commercial Loss (AT&C) losses for DISCOMs deteriorated from 20.73% in FY20 to 22.32% in FY21.
DISCOMs sold 1005.04 billion units (BU) of power in FY21, a decrease of 1.88% compared to 1024.31 BU sold in FY20. Revenue from the sale of power, including tariff subsidy billed, decreased to ₹6.33 trillion (~$77 billion) in FY21 from ₹6.44 trillion (~$78.32 billion) recorded in FY20.
Tariff subsidy billed by DISCOMs increased from ₹1.21 trillion (~$14.71 billion) in FY20 to ₹1.32 trillion (~$16.05 billion) in FY21. Tariff subsidies increased from 16.52% of total revenue in FY 20 to 18.53% in FY21. The tariff subsidy released by state governments decreased from 95.08% of total revenue in FY20 to 84.54% in FY21.
The tariff subsidy gap increased from ₹0.24 (~$0.0029)/kWh in FY20 to ₹0.41 (~$0.0050)/kWh in FY21. The gap in tariff subsidy received, excluding regulatory income and revenue grant under UDAY for loan takeover, increased from ₹0.50 (~$0.0061)/kWh in FY20 to ₹0.71 (~$0.0086)/kWh in FY21. The cash-adjusted gap increased from ₹0.83 (~$0.010)/kWh in FY20 to ₹0.95 (~$0.012)/kWh in FY21.
Receivables for the sale of power increased from 140 days of sale for FY20 to 161 days of sale for FY21. Payables for purchasing power increased from 164 days of sale to 176 days of sale.
The performance of DISCOMs and their financial status has been a huge concern for developers. The Ministry of Power has downgraded 25 DISCOMs due to a huge difference between the revenue and cost realized per kWh, high operational and maintenance costs, poor performance on power purchases, and interest costs.
Many renewable energy projects have been affected by DISCOMs delaying payments or reneging on power purchase agreements. Most DISCOMs rely on loans for daily operations and cannot bring efficiencies by modernizing their systems. On average, DISCOMs face a loss of ₹0.93 (~$0.012)/kWh of input energy.
As a penalty for not clearing their dues to generators, in August, Power System Operation Corporation (POSOCO) debarred 15 DISCOMs in six states and a union territory from buying or selling electricity at power exchanges, under the rule of late payment surcharge.
Mercom had earlier reported about the importance and the need for installing smart meters as a first step towards DISCOM reforms. Prepaid metering can help reduce thefts and increase collection, significantly reducing AT&C losses.