Distressed discoms, high demand: What is ailing India's power sector?

Indian states and union territories (UTs) owe over Rs 1 trillion to the gencos and Rs 62,931 crore to the discoms

In 2022, India saw the worst shortfall in the supply of electricity in over six years. A Reuters report stated that areas from Jammu and Kashmir to Andhra Pradesh saw power cuts ranging from 2-8 hours daily in April.

The power ministry's data showed that Delhi, Haryana, Andhra Pradesh, Rajasthan, Kerala, Punjab and Bihar faced the worst power crisis. Most of it can be attributed to these state governments' promise of free electricity to the citizens.

These promises lead to delayed payments to the power generation companies (gencos) and the power distribution companies (discoms). According to the data from the office of the chief economic advisor (CEA), Indian states and union territories (UTs) owe over Rs 1 trillion to the gencos.

Additionally, they owe Rs 62,931 crore to the discoms. Also, discoms are yet to receive Rs 76,337 crore from the state governments in subsidies.

Among the states, Maharashtra, Tamil Nadu, Andhra Pradesh and Telangana have the highest outstanding dues towards the gencos, the data further revealed. As of May 31, 2022, Maharashtra had to pay over Rs 21,500 crore to the gencos. Tamil Nadu followed with Rs 20,990 worth of dues.

Power Crisis in India
Infogram

 

For discoms, Telangana owed the highest amount at Rs 11,935 crore. Maharashtra followed it with Rs 9,131 crore worth of payment due.

In India, the average transmission losses stand at over 20 per cent. It is much higher than the average of 5-8 per cent in developed countries. To get close to that range, India needs to improve its infrastructure.

However, with deferred payments and outstanding dues rising, the discoms and gencos have limited options apart from reducing their cost of operations only. Thus, a vicious cycle of high wastage and low availability exists in the power sector.

However, in recent times, smart meters have emerged as a way to reduce power consumption. In Uttar Pradesh, this has brought down discoms’ bills by 36 per cent. In a pilot project in Andhra Pradesh, a 36 per cent reduction in consumption was noted.