Public Sector Discoms Outpace Private Counterparts in Payment Speed Despite Financial Woes
In a surprising revelation, public sector electricity distribution companies (discoms) have demonstrated a faster pace in clearing dues to power suppliers compared to their private sector counterparts, even as they grapple with significantly higher financial stress. This finding emerges from the 14th Integrated Rating and Ranking of Power Distribution Utilities for 2024-25, released by the Union Ministry of Power, shedding light on the complex dynamics within India's power sector.
Days Payable Parameter Highlights Public Sector Efficiency
The report indicates that on the days payable parameter, which measures the average time taken by discoms to settle supplier payments, public sector utilities recorded 112 days. This figure is marginally lower than the all-India average of 113 days. In stark contrast, private sector discoms reported a higher days payable of 133 days, suggesting a slower payment cycle despite their overall stronger financial health.
This relatively better performance by public sector discoms in payment timeliness stands in sharp opposition to their precarious financial position. Private sector discoms consistently outperform on most other key metrics, including revenue collection, cost recovery, and aggregate technical and commercial (AT&C) losses, highlighting a paradox in operational efficiency.
Mounting Financial Stress and Structural Challenges
The findings come amid growing concerns over the financial health of public sector discoms across the country. A majority of state-owned utilities continue to incur substantial losses and rely heavily on borrowings to finance operating shortfalls and accumulated liabilities. Currently, the total accumulated losses of public sector discoms stand at Rs 6.77 lakh crore, while their total borrowings amount to Rs 7.11 lakh crore, painting a grim picture of their fiscal stability.
The recently released draft National Electricity Policy 2026 has acknowledged these structural challenges and proposed measures to address the persistent financial stress faced by discoms. This policy initiative aims to streamline operations and enhance sustainability in the power distribution sector.
Private Companies Dominate Top Rankings
The comprehensive report assessed the financial and operational performance of 65 power distribution utilities, including 42 public sector discoms, 12 private sector discoms, and 11 power departments. Among these, 31 utilities received top ratings of A+ or A, denoting exceptionally strong or very high financial and operational performance. These included 14 public sector discoms, eight private sector discoms, and nine power departments.
Notably, the top three positions were secured by private sector players:
- Torrent Power Ahmedabad
- Torrent Power Surat
- Adani Electricity Mumbai Ltd (AEML)
Conversely, the three lowest-ranked utilities were all state-owned: Telangana's TGNPDCL, Jharkhand's JBVNL, and Telangana's TGSPDCL, all assigned a C- grade indicating low financial and operational performance.
Cost Recovery and Efficiency Metrics Reveal Disparities
Public sector discoms continue to struggle with recovering the cost of supply, exacerbating their financial woes. Private sector discoms, however, generally achieve better cost realisation, with average tariffs exceeding their cost of supply. This divergence is evident in the ACS-ARR (cash-adjustment) gap, a key indicator of financial health that measures the shortfall when a discom's cost of supplying electricity exceeds the revenue recovered.
In 2024-25, the all-India ACS-ARR (cash adjustment) gap stood at Rs 0.07/Kilowatt-hour (kWh), a significant improvement from Rs 0.32/kWh in the previous year. For public sector discoms, the gap was higher at Rs 0.12/kWh, indicating costs continued to exceed realised revenues. In contrast, private sector discoms recorded a negative gap of Rs 0.68/kWh, suggesting surplus revenue over costs. AEML emerged as the best performer on this parameter with a gap of Rs 2.04/kWh.
Public sector discoms also underperformed on efficiency metrics. Aggregate Technical and Commercial (AT&C) losses for public sector utilities in 2024-25 stood at 15.41%, slightly higher than the national average of 15.04%. AT&C losses represent the gap between electricity input and actual revenue realised, arising from technical losses, power theft, and unpaid bills. The private sector recorded significantly lower AT&C losses at 10.05%, with Torrent Power Surat topping the rankings at just 3.24%.
Operational Parameters Further Highlight Performance Gaps
Across other operational parameters, private sector discoms continued to outperform their public sector counterparts:
- Billing efficiency: Private utilities recorded 90.33%, higher than the 87.39% achieved by public sector discoms.
- Collection efficiency: Private sector discoms reported 99.58%, compared with 96.80% for public sector utilities.
- Days receivable: Private sector discoms recorded an average of 17 days, sharply lower than the 121 days reported by public sector discoms, which also exceeded the all-India average of 112 days.
These metrics underscore persistent delays in revenue realisation for public sector discoms, further compounding their financial challenges. As the power sector evolves, addressing these disparities will be crucial for ensuring sustainable and efficient electricity distribution across India.
