Aggregate losses of discoms climb 66% as several state govts delay releasing subsidy funds

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At a time when generation companies (gencos) and transmission companies (transcos) continued to earn profits, the aggregate losses of distribution companies (discoms) climbed 66 percent from Rs 30,203 crore in 2019-20 to Rs 50,281 crore in 2020-21, revealed Power Finance Corporation’s (PFC) annual performance report on power utilities, which was released on October 14.

The report also stated that Delhi, Karnataka and Bihar were the top states/union territories which did not release the entire tariff subsidy billed to their respective discoms in 2020-21.

The report on “performance of power utilities 2020-21” released by union power minister RK Singh found that while the tariff subsidy billed by discoms increased from Rs 1,20,828 crore in 2019-20 to Rs 1,32,416 crore in 2020-21, the funds released by state governments as a percentage of the tariff subsidy billed by discoms rather decreased from 95.08 percent in 2019-20 to 84.54 percent in 2020-21.

“All state governments except Delhi (92.42%), Karnataka (92.07%), Bihar (91.24%), Punjab (87.36%), Maharashtra (86.30%), Rajasthan (77.17%), Tripura (73.79%), Jharkhand (73.74%), Madhya Pradesh (70.75%), Andhra Pradesh (36.84%), Sikkim (0%), Puducherry (0%) and Mizoram (0%) have released entire tariff subsidy billed to their respective distribution utilities during 2020-21,” read the report.

The net worth of discoms continued to be negative at Rs 44,160 crore as on March 31, 2021, and the total borrowings by them increased from Rs 5,05,246 crore as on March 31, 2020, to Rs 5,86,194 crore as on March 31, 2021.

At the same time, the gencos and transcos continued to earn profits during the same period. “Generation utilities earned a profit of Rs 2,700 crore in 2020-21, as compared to a profit of Rs 3,836 crore in 2019-20. 16 out of 23 generation utilities registered profit in 2020-21. Net worth for generation utilities increased by Rs 4,546 crore from Rs 1,10,541 crore as on March 31, 2020 to Rs 1,15,087 crore as on March 31, 2021,” it stated.

Similarly, transmission utilities earned a profit of Rs 955 crore in 2020-21 compared to a loss of Rs 287 crore in 2019-20. 15 out of 22 transmission utilities registered profit in 2020-21. The net worth for transmission utilities increased by Rs 7,111 crore from Rs 86,503 crore as on March 31, 2020, to Rs 93,614 crore as on March 31, 2021.

Data shared by the power ministry with the Parliament showed that a total of 27 of the 36 states and union territories in the country are providing some form of power subsidies to their consumers, with at least Rs.1.32 lakh crore spent nationally in the year 2020-21 alone. Records also stated that Madhya Pradesh, Rajasthan and Karnataka are paying the highest for freebies on electricity with the three states spending Rs 48,248 crore (36.4%) in 2020-21.