**Executive Summary**
This document summarizes the Ministry of Power's response to Unstarred Question No. 927 in the Lok Sabha on February 5, 2026, concerning the financial losses of Power Distribution Companies (DISCOMs). It addresses notices issued to DISCOMs in several states regarding financial losses and potential privatization, and details the Ministry's initiatives to improve the financial viability of these entities. The response specifies that privatization of State DISCOMs does not fall under the Central Government.
**Key Points / Main Content**
* **Privatization and State Control:** Electricity is a concurrent subject, and power distribution falls under the administrative control of State Governments and their respective Electricity Regulatory Commissions (ERC). Privatization of State DISCOMs does not fall under the purview of the Central Government.
* **Electricity Act 2003:** Distribution utilities have a duty under the Electricity Act 2003 to maintain an efficient, coordinated, and economical distribution system. Inefficiency negatively impacts the entire value chain.
* **Financial Stress in Key States:** Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh account for a large share (48%) of national electricity consumption, but also for 69% of total accumulated loss and 66% of total outstanding debt of distribution utilities.
* **Government Initiatives:** The Government of India supports distribution utilities to improve financial viability through:
* Revamped Distribution Sector Scheme (RDSS) to improve power quality and reliability. Funds are linked to states/utilities taking necessary measures.
* Additional borrowing space of 0.5% of GSDP to State Governments, conditional on power sector reforms.
* Additional Prudential Norms for sanctioning loans, contingent on the performance of power distribution utilities.
* Rules for Fuel and Power Purchase Costs Adjustment (FPPCA) and cost-reflective tariffs.
* Rules and Standard Operating Procedure for proper subsidy accounting.
* **Aggregate Technical and Commercial (AT&C) Losses:** Due to concerted efforts, AT&C losses have reduced from 21.91% in FY21 to 15.04% in FY25. Reduction in losses improves finances, enabling better system maintenance and power purchase.
* **Financial Data (FY 2024-25):** Annexure contains specific financial data (Profit/Loss After Tax and Accumulated Surplus/Loss) for FY 2024-25 for key states, including Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, Tamil Nadu, and Uttar Pradesh.
**Impact Analysis**
**Key Stakeholders Impacted:**
* **State Governments:**
**Impact**
Affected by conditions tied to financial assistance and required to implement specific power sector reforms to improve the performance of their DISCOMs.
**Action Required**
Undertake specific reforms in the power sector to become eligible for additional borrowing space of 0.5% of GSDP. Implement measures to improve the performance of their DISCOMs to meet the Additional Prudential Norms required for sanctioning of loans to state-owned power utilities.
* **Power Distribution Companies (DISCOMs):**
**Impact**
Subject to financial restrictions, potential privatization, and are required to improve efficiency and reduce losses.
**Action Required**
Reduce financial losses and improve operational efficiency to avoid potential privatization. Implement the RDSS scheme and other initiatives to improve performance and access funds.
* **Consumers (Farmers and Low-Income Consumers in Uttar Pradesh):**
**Impact**
Potentially affected by changes in electricity tariffs and service quality due to reforms.
**Action Required**
Monitor the changes in electricity prices and service quality.
* **Ministry of Power:**
**Impact**
Responsible for implementing and overseeing initiatives to improve the financial viability of DISCOMs, while ensuring that consumers are not adversely affected.
**Action Required**
Ensure the initiatives are effectively implemented and are being monitored to minimise any potential increase in electricity tariffs and deterioration in service quality as a result of these reforms.
Key Entities Referenced
Power Distribution Companies (DISCOMs): Entities responsible for distributing electricity to consumers in various states, and the subject of financial loss concerns.
Electricity Act 2003: Legislation imposing a duty on distribution utilities to maintain an efficient and economical distribution system.
Ministry of Power: The government body issuing notices to DISCOMs and responsible for supporting them to improve financial viability.
RDSS: Scheme launched to improve the quality and reliability of power through a financially sustainable distribution sector.
Uttar Pradesh: One of the states with Power Distribution Companies facing financial losses.
GOVERNMENT OF INDIA
MINISTRY OF POWER
LOK SABHA
UNSTARRED QUESTION NO.927
ANSWERED ON 05.02.2026
FINANCIAL LOSSES OF DISCOMs
†927. DR. ANAND KUMAR:
Will the Minister of POWER
be pleased to state:
(a) whether the Ministry of Power has recently issued notices to the Power
Distribution Companies (DISCOMs) of Uttar Pradesh, Andhra Pradesh, Madhya
Pradesh, Maharashtra, Rajasthan and Tamil Nadu regarding reducing their financial
losses failing which they would face privatization;
(b) if so, the current status of the financial losses of these DISCOMs;
(c) whether the Ministry is planning to restrict central financial assistance to the
DISCOMs in these States if they do not adopt measures such as selling twenty six per
cent equity, transferring complete management control, or listing on the stock
exchange with an 'A' rating; and
(d) if so, the steps being taken by the Ministry to prevent any potential increase in
electricity tarrifs or deterioration in service quality as a result of these reforms,
particularly for farmers and low-income consumers in Uttar Pradesh so that electricity
does not become more expensive and services are not disrupted?
A N S W E R
THE MINISTER OF STATE IN THE MINISTRY OF POWER
(SHRI SHRIPAD NAIK)
(a) to (c) : Electricity is a concurrent subject and power distribution is handled by
distribution utilities that function under the administrative control of their respective
State Government and regulations of respective Electricity Regulatory Commission
(ERC). Hence, privatization of State DISCOMs does not come under the purview of
Central Government.
Under the Electricity Act 2003, distribution utilities have a duty to maintain an
efficient, coordinated, and economical distribution system. Further, any inefficiency
in this segment has a cascading impact on the whole value chain, disrupting their
operations and adversely affecting financial viability.
The states of Andhra Pradesh, Madhya Pradesh, Maharashtra, Rajasthan, Tamil
Nadu, and Uttar Pradesh account for a very large share (48%) of national electricity
consumption. However, financial stress is also concentrated in these States and they
account for 69% of total accumulated loss and 66% of total outstanding debt of
distribution utilities. Details of financial losses of State Distribution Utilities of these
for FY 2024-25 are attached at Annexure.The Sixteenth Finance Commission has noted that as public entities, DISCOMs
lack the necessary incentive to achieve a high degree of efficiency in plugging
leakages through technical losses, theft, under-billing, and under-collection. It has
recommended that the first-best solution to the problem is the privatization of
DISCOMs. Alternatively, if a solution is sought within the public ownership framework,
the States of Gujarat and Haryana provide two examples that are worth emulating.
(d) : Government of India has been supporting the distribution utilities to improve
their financial viability through various initiatives. Some of the key initiatives taken
are as under:
i. RDSS has been launched with the objective of improving the quality and
reliability of power through a financially sustainable and operationally efficient
distribution sector. The release of funds under the scheme is linked to States/
distribution utilities taking necessary measures to improve their performance.
ii. Additional borrowing space of 0.5% of GSDP to State Governments, which is
conditional on them undertaking specific reforms in the power sector.
iii. Additional Prudential Norms for sanctioning of loans to State owned power
utilities are contingent to the performance of power distribution utilities against
prescribed conditions.
iv. Rules for implementation of Fuel and Power Purchase Costs Adjustment
(FPPCA) and cost reflective tariff so as to ensure that all prudent cost for supply
of electricity are passed through.
v. Rules and Standard Operating Procedure have been issued for proper subsidy
accounting and their timely payment.
As a result of the concerted efforts of the Ministry of Power, the State
Governments and distribution utilities, Aggregate Technical and Commercial (AT&C)
Losses have reduced from 21.91% in FY21 to 15.04% FY25. 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, thus benefitting the consumers.
***********ANNEXURE
ANNEXURE REFERRED IN REPLY TO PARTS (a) TO (c) OF UNSTARRED
QUESTION NO. 927 ANSWERED IN THE LOK SABHA ON 05.02.2026
*************
2024-25
Profit/ (Loss) After Tax (PAT) Accumulated Surplus/(Loss)
State (Rs crore) (Rs crore)
Andhra Pradesh 190 (29,420)
Madhya Pradesh (2,561) (71,394)
Maharashtra 1,292 (35,671)
Rajasthan 1,262 (90,303)
Tamil Nadu 2,073 (1,19,153)
Uttar Pradesh (10,796) (1,00,858)
National 2,701 (6,47,210)
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