Marked reduction in aggregate technical and commercial losses of DISCOMs in Financial Year 2022
Ministry of Power institutes number
of measures to improve the performance of utilities
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Aggregate Technical and Commercial Loss (AT&C Loss)
and ACS-ARR Gap are key indicators of DISCOM performance. In the last 2 years,
the AT&C loss of the DISCOMs of the country was hovering at 21-22%.
Ministry of Power instituted a number of measures to improve the performance of
utilities. Preliminary analysis of data for FY2022 of 56 DISCOMs
contributing to more than 96% of input energy, indicates that the AT&C
losses of DISCOMs have declined significantly to ~17% in FY2022 from ~22% in
FY2021.
Reduction in AT&C losses improves the finances of the
utilities, which will enable them to better maintain the system and buy power
as per requirements; benefitting the consumers. The reduction in AT&C
losses has resulted in reduction in the Gap between Average Cost of Supply
(ACS) and Average Realizable Revenue (ARR). The ACS-ARR Gap (on subsidy
received basis, excluding Regulatory Income & UDAY Grant) has declined from
Rs. 0.69/kWh in FY2021 to Rs. 0.22/kWh in FY2022.
The decline of 5% in AT&C losses and 47 paise in the
ACS-ARR Gap in one year is the result of a number of initiatives taken by the
Ministry of Power. On 04th September
2021, the Ministry of Power revised the prudential norms of PFC and REC, the
lending agencies for the power sector to provide that 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 Ministry of Power 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. The Revamped Distribution Sector scheme
lays down that funding under the scheme will be available only if the DISCOM
commits to an agreed loss reduction trajectory. The Ministry of Power made a
series of presentations before the 15th Finance
Commission as a result of which 15th Finance
Commission provided for an additional borrowing window to States contingent on
their taking steps to reduce to their DISCOMs losses. The Ministry of
Power issued Regulations on 07th October
2021 providing for mandatory energy accounting and energy auditing for all
DISCOMs. On 03rd June
2022, the Ministry of Power issued Late Payment Surcharge Rules which provide
that unless the Distribution companies promptly pay for the power drawn from
the ISTS, their access to the power exchange will be cut off. While
putting all these in place; the Ministry of Power also worked with the
distribution companies to provide the necessary finances under the RDSS for
undertaking the loss reduction measures.
The above improvement is a result of the concerted efforts of the Ministry of Power, the State Governments as well as Distribution companies to implement the reforms and adoption of best practices. As a result - the viability of the power system has improved. This was necessary because the demand for power has been growing and further investments will be necessary for the power sector to expand to meet the growing demand; and the investments will only come if the power sector remains viable.