Opinion | The case for power discom privatization

Opinion | The case for power discom privatization

Distribution serves the most vital function in India’s power supply chain, yet it is also possibly the weakest link. State discoms continue to make losses despite multiple bailouts. While the government’s Ujjwal Discom Assurance Yojana (UDAY) scheme seeks to reduce discom losses, there is hardly any impact on their financial status.

In fact, the combined losses of state-owned power discoms by end FY 2017-18 were ₹ 40,295 crore. Discoms continue to face power theft (published aggregate technical and commercial, or AT&C, losses being nearly 20%), billing inefficiencies and regulatory delays in tariff increases, resulting in financial losses.

The accumulated debt of power discoms was ₹ 45,952 crore. The banking sector still faces the possibility of an estimated ₹ 175,000 crore worth of non-performing assets due to the power sector.

Privatization can be a possible solution to overcome the sector’s commercial challenges. Several private utilities (Calcutta Electric Supply Corporation Kolkata, Reliance Mumbai Read More

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