Group of Ministers Discusses Viability of Power Distribution Utilities, Targets Reforms for Financial Sustainability

Union Minister Shri Shripad Yesso Naik underlined that the financial health of DISCOMs is crucial for India's energy sector.

In a high-level virtual meeting, Union Minister of State for Power and New & Renewable Energy, Shri Shripad Yesso Naik, as Chairperson of the Group of Ministers (GoM), led discussions on the financial viability of electricity distribution utilities (DISCOMs). The meeting, which brought together key state energy ministers, focused on strengthening India’s power distribution sector, addressing financial inefficiencies, and enhancing operational efficiency through policy reforms and technological adoption.

Key Attendees and State Participation

The meeting was attended by: 

Shri A.K. Sharma, Energy Minister, Uttar Pradesh (Convenor) 

Shri Gottipati Ravi Kumar, Energy Minister, Andhra Pradesh 

Shri Pradyuman Singh Tomar, Energy Minister, Madhya Pradesh 

Thiru V. Senthil Balaji, Electricity Minister, Tamil Nadu 

Smt. Meghana Deepak Sakore Bordikar, Minister of State for Energy, Maharashtra 

Shri Heeralal Nagar, Minister of State for Energy, Rajasthan

Senior officials from the Central and State Governments, along with representatives from Power Finance Corporation Ltd., also participated.

Strengthening Financial Viability of DISCOMs

Shri Arvind Kumar Sharma, convenor of the Group of Ministers (GoM), commended the proactive measures taken by the Government of India to enhance the financial and operational efficiency of DISCOMs.

 He emphasized timely payment of government department dues and state subsidies to utilities. 

He advocated adopting new technology in the distribution sector.  He stressed the importance of effective consumer grievance redressal mechanisms.

Union Minister’s Opening Remarks: Urgent Need for Financial Reforms

Union Minister Shri Shripad Yesso Naik underlined that the financial health of DISCOMs is crucial for India's energy sector.

Challenges Facing DISCOMs

• The year-on-year gap between the Average Cost of Supply (ACS) and Average Revenue Realized (ARR) is eroding financial stability.
• High Aggregate Technical & Commercial (AT&C) losses, exceeding the global benchmark of 6–8%, are a concern.
• Non-cost reflective tariffs, inefficient power purchase agreements, and distribution losses have worsened financial woes.
• Increased investment is required to meet India's rising energy demand.

Key Recommendations by the Minister 

Enhance power distribution networks and modernize infrastructure. 

Leverage smart metering and digital technologies to reduce billing inefficiencies. 

Study Gujarat’s DISCOM model for insights on financial restructuring and efficiency improvements. 

Improve state-wise financial planning to reduce reliance on unsustainable debt.

State-Specific Inputs and Best Practices

📍 Andhra Pradesh: Prioritizing Renewable Energy & PM KUSUM 

Shri Gottipati Ravi Kumar, Energy Minister of Andhra Pradesh, emphasized the state's commitment to renewable energy expansion. 

He highlighted progress under PM KUSUM and PM Surya Ghar: Muft Bijli Yojana, which supports farmers with solar energy adoption.

📍 Madhya Pradesh: Strengthening Energy Accounting & Auditing 

Shri Pradyuman Singh Tomar, Energy Minister of Madhya Pradesh, stressed the importance of accurate energy audits to reduce line losses. 

He also called for strengthening consumer grievance redressal mechanisms across government levels.

📍 Tamil Nadu: Smart Metering for Revenue Improvement 

Thiru V. Senthil Balaji, Electricity Minister of Tamil Nadu, discussed state-level power sector reforms. 

He emphasized that smart metering plays a pivotal role in revenue enhancement and loss reduction.

📍 Maharashtra: Solar Energy for Agricultural Power Supply 

Smt. Meghana Deepak Sakore Bordikar, Minister of State for Maharashtra, highlighted the Mukhyamantri Saur Krushi Vahini Yojana. 

This initiative improves power quality for farmers and lowers power purchase costs for utilities.

📍 Rajasthan: Renewable Energy & Hybrid Annuity Model

Shri Heeralal Nagar, Minister of State for Rajasthan, underscored the state’s renewable energy potential. 

He highlighted Hybrid Annuity Model (HAM) projects, which offer low-cost daytime power supply for agriculture.

Consensus & Future Roadmap

 Innovative, out-of-the-box solutions will be explored to improve financial viability of DISCOMs.

Member states will host further meetings to discuss targeted state-wise reforms.

Group of Ministers (GoM) on Distribution Utilities: Objectives & Scope

The GoM on Distribution Utilities was constituted to address India’s power sector challenges, with the following members:

Chairperson: 🔹 Union Minister of State for Power & New & Renewable Energy, Government of India

Members: 🔹 Energy Minister, Uttar Pradesh (Convenor) 🔹 Energy Minister, Andhra Pradesh 🔹 Energy Minister, Rajasthan 🔹 Energy Minister, Tamil Nadu 🔹 Energy Minister, Madhya Pradesh 🔹 Energy Minister, Maharashtra

Terms of Reference (ToR) for GoM

 Analyze the debt scenario in key states. 

Identify key financial parameters to monitor utility borrowings and debt sustainability. 

Recommend liquidity support measures and develop a fiscal discipline program to avoid a debt trap. 

Formulate investment guidelines for capital expenditure, ensuring:

• Technical & financial due diligence
• State government equity investments
• Tariff-based cost recovery mechanisms 
• Propose reforms to attract private investment in the distribution sector.

Next Steps

 The GoM will submit a comprehensive report within three months, outlining actionable policy recommendations. 

The findings will be used to shape India’s long-term power sector strategy, ensuring financially sustainable and technologically advanced electricity distribution utilities.

This GoM initiative is a critical step towards enhancing India’s power infrastructure, fostering energy security, and enabling a self-reliant, efficient, and financially stable distribution sector.