India’s power utilities face monetary losses exceeding ₹10,000 crore ($1.14 billion) for every 1 percent increase in aggregate technical and commercial losses, Union Minister of State for Power and New & Renewable Energy Shripad Yesso Naik said on Tuesday.
Speaking at the second meeting of the Group of Ministers on the viability of electricity distribution utilities, Naik stressed the importance of leveraging renewable energy to reduce the cost of power generation.
Maharashtra Chief Minister Devendra Fadnavis, who also holds the state’s energy portfolio, hosted the meeting in Mumbai, which was attended by ministers and officials from Tamil Nadu, Uttar Pradesh, Andhra Pradesh, Rajasthan, and the central government.
“The financial viability of power distribution utilities is a key concern, and addressing AT&C losses is critical,” Naik said. “The government is committed to reforms that will enable efficient power distribution while ensuring affordable electricity for consumers.”
Renewable Energy as a Solution
Fadnavis backed the push for renewable energy expansion, citing Maharashtra’s Mukhyamantri Saur Krishi Vahini Yojana, which aims to provide daytime solar power to farmers while reducing the state’s subsidy burden. He also highlighted the state’s rapid solarization of agricultural load feeders as a strategy to cut costs.
Naik pointed out that states like Maharashtra and Rajasthan are already making strides in RE adoption, adding that advancements in artificial intelligence for demand forecasting and power purchase optimization could further enhance efficiency.
Regulatory Reforms and Financial Viability
The meeting also addressed the need for inflation-indexed and cost-reflective power tariffs to ensure sustainability. Participants discussed outstanding debts and losses of distribution utilities, with Naik advocating for mechanisms such as timely payment of government dues and sharing best practices among DISCOMs.
Fadnavis called on the central government to reintroduce the Ujjwal DISCOM Assurance Yojana and to lower interest rates on loans provided by Power Finance Corp. and REC Ltd. He also sought regulatory relaxations to allow surplus funds from DISCOMs to be used for infrastructure development rather than debt servicing.
Path Forward
State representatives from Tamil Nadu, Uttar Pradesh, Andhra Pradesh, and Rajasthan shared insights into the challenges and reforms they have undertaken in their distribution sector. Gujarat, invited as a special participant, presented best practices that have helped its DISCOMs achieve profitability.
The GoM resolved to take further steps to improve DISCOM financial viability and decided to hold its third meeting in Uttar Pradesh in March.
