LOSS, DEBT, AND DISCOMS

As state discoms face another debt crisis, the suggestion to list them needs a close look

- SHREYA JAI

Last week, at a conference of state power ministers in New Delhi, Union Power Minister M L Khattar urged them to publicly list their profit-making power sector entities. "Those states which have good performing generating or transmission companies (gencos or transcos) and even power distribution companies (discoms) should consider listing them on exchanges," Khattar said. But he juxtaposed it with the worrying statistics of state-owned discoms. "The current cumulative debt of discoms is ₹6.84 trillion, and the accumulated losses stand at ₹6.46 trillion as of now," the minister said.

During 2023-24 (FY24), the cost of power procurement for state-owned discoms increased by 71 paise, according to government data submitted in Parliament. Various reasons have been cited for it—such as imported coal, increased cost of power transmission, and record-high demand.

As discoms pushed all the buttons to meet the record-high demand during FY23, their total debt rose to ₹70,000 crore for funding their capital expenditure, working capital requirement, and operational losses, according to the Annual Integrated Ranking and Rating report of the PFC earlier this year. The report said 16 states had seen their financial losses increase significantly during FY23 (see chart). These include large states such as Uttar Pradesh, Telangana, Maharashtra, Punjab, and Jharkhand.

The debt-loss vortex of discoms could stand to threaten the idea of financing them through public money.