In a recent press statement, the Ministry of Power (MoP) has provided key data related to performance of distribution companies (discoms). As per MoP, during last two years, the Aggregate Technical and Commercial (AT&C) losses of the discoms of the country was hovering at 21-22 per cent. The preliminary analysis of data for 2022 of 56 discoms contributing to more than 96 per cent of input energy indicated that the AT&C losses have declined significantly to 17 per cent in 2022 from 22 per cent in 2021.
The reduction in AT&C losses improves the finances of the utilities and enables them to better maintain the system and buy power as per requirements thereby benefitting the consumers. The reduction in AT&C losses has resulted in the reduction in the gap between Average Cost of Supply (ACS) and Average Realisable Revenue (ARR). The ACS-ARR gap has declined from Rs 0.69 per kWh in 2021 to Rs 0.22 per kWh in 2022.
The decline of 5 per cent in AT&C losses (Re 0.47 per unit) in the ACS-ARR gap in one year is the result of a number of initiatives taken by the MoP. On September 4, 2021, the MoP revised the prudential norms of PFC and REC. According to these norms, the loss making discoms will not be able to avail financing from PFC and REC until and unless they draw up an action plan for reducing the losses within a specific timeframe and get their state government’s commitment to it. The MoP also decided that any future assistance under any scheme for strengthening of the distribution system by the discoms will be available to a discom which is making losses only if it undertakes to bring its AT&C losses / ACS-ARR gap down to specified levels within a specific timeframe and gets their state government’s commitment to it.