Half-hearted reforms won’t help salvage discoms: RK Singh

Power minister RK Singh on Monday called for immediate correction of wrong policies like continuing state subsidies for large sections of electricity consumers and billing-and-collection inefficiencies which keep state distribution companies (discoms) in poor financial health.

Stressing the need for robust and sustainable revenue stream for discoms which have been given many bailout packages, the minister noted that half-hearted reforms under Electricity Act 2003 was also to blame for the current state of affairs. Distribution companies are still to be entirely removed from the clutches of the state governments, so they are not able to take commercial decisions in a free manner.

Speaking at a Ficci event, the minister said that most of the state discoms are loss-making in contrast with the private discoms and franchisee companies where the AT&C losses are less than 10% and all are profitable.

The state discoms are not able to pay for power and resort to load shedding. They fail to maintain the system. The trend is going on for decades and every six to seven years the central government injects funds to strengthen the distribution system, but it doesn’t fully resolves the problem.

The minister noted that if lack of efficiency in billing and collection is set right, every discom will become profitable as it will include billing of electricity that is lost due to theft.

financial express
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