Profitable state power companies should go for IPOs, says Union Minister ML Khattar

The country’s power sector would require investments to the tune of Rs 22 trillion in this decade, Union minister for power, ML Khattar said on November 12.

Union Power Minister Manohar Lal Khattar on November 12 said he has urged states to list their profitable power companies to raise capital.

"We have urged states with well-performing generating companies (gencos), transmission companies (transcos), and power distribution companies (discoms) to consider listing them on exchanges,” Khattar said in a press conference after a day-long annual meeting with power ministers of all states and union territories.

He said while traditional sources like banks and financial institutions are available, states should expand their financing avenues. Khattar's statement comes at a time when NTPC Green Energy Ltd., the renewable energy arm of India's largest power producer NTPC Ltd., is set to launch its initial public offering (IPO).

The Union minister said states such as Gujarat and Haryana are considering listing their power utilities. “Initially we can start with well-rated transcos, followed by gencos. Discoms continue to struggle with financial viability, so states should improve their prospects and rankings before considering their listing,” he said.

The current cumulative debt of discoms is Rs 6.84 trillion, and the accumulated losses stand at Rs 6.46 crore, according to data shared by the minister.

Power transmission and distribution projects require substantial investment. Khattar stated that the country’s power sector would require investments to the tune of Rs 22 trillion in this decade.

The Centre has asked states to promote nuclear power projects and look for adequate sites for such projects. Currently, 18 sites have been identified for possible nuclear power plants. Khattar further said the Centre has also suggested states to offer concessional tariffs to promote smart metre installations.

The minister said the Aggregate Technical and Commercial (AT&C) losses, which indicate operational inefficiencies, increased to 17.6 percent during FY24, compared to 15.4 percent in the yaer ago. In 2021, the government had set the target to bring down AT&C losses to 12-15 percent by the financial year 2025. However, going by the latest data, the government has failed to achieve its target.

AT&C losses are a combination of energy loss and commercial loss. While energy loss may comprise technical loss, theft, and inefficiency in billing, commercial loss constitutes default in payment and inefficiency in the collection.