Despite financial strain, public sector discoms clear power dues faster than private utilities

The findings come amid growing concerns over the financial health of public sector discoms in the country’s power sector. A majority of state-owned utilities continue to incur losses and rely heavily on borrowings to finance their operating shortfalls and accumulated liabilities. At present, 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.

The recently released draft National Electricity Policy 2026 has also acknowledged these structural challenges, and has proposed measures to address the persistent financial stress faced by discoms.

Private companies top ranks

The 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. Of these, 31 utilities received top ratings of A+ or A. These included 14 public sector discoms, eight private sector discoms, and nine power departments.

An A+ rating denotes “exceptionally strong financial and operational performance,” while an A rating indicates “very high financial and operational performance,” according to the report.

The top three positions were secured by private sector players — Torrent Power Ahmedabad, Torrent Power Surat, and Adani Electricity Mumbai Ltd (AEML), respectively. Whereas, the three lowest-ranked utilities were all state-owned: Telangana’s TGNPDCL, Jharkhand’s JBVNL, and Telangana’s TGSPDCL. All three were assigned a C- grade, indicating low financial and operational performance.

Cost recovery remains a challenge

The report indicates that public sector discoms continue to struggle with recovering the cost of supply, adding to their financial woes. Private sector discoms, by contrast, generally achieve better cost realisation, with average tariffs exceeding their cost of supply.

This divergence is reflected in the ACS (Average Cost of Supply)-ARR (Average Revenue Realised) (cash-adjustment) gap — a key indicator of the financial health of power distribution utilities — which measures the shortfall when a discom’s cost of supplying electricity exceeds the revenue recovered through tariffs and subsidies.

When calculated on a cash adjustment basis, the metric offers a sharper picture of operational viability by accounting only for actual cash inflows and outflows, excluding accounting deferrals and non-cash adjustments. It remains significantly higher for public sector discoms than for their private counterparts, data shows.

According to the report, the all-India ACS-ARR (cash adjustment) gap in 2024-25 stood at Rs 0.07/Kilowatt-hour (kWh). This marks a significant improvement from the previous year, when the figure stood at Rs 0.32/kWh.

For public sector discoms, however, the gap was higher at Rs 0.12/kWh, indicating that costs continued to exceed realised revenues. In contrast, private sector discoms recorded a negative gap of Rs 0.68/kWh, suggesting that their revenues were sufficient to cover the cost of supply. A positive ACS-ARR gap reflects a revenue shortfall, while a negative gap indicates surplus revenue over costs.

Among individual utilities, AEML emerged as the best performer on this parameter, reporting an ACS-ARR (cash adjustment) 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 in transmission and distribution networks, power theft, and unpaid bills.

The AT&C losses of the private sector are significantly lower than both public sector and national average, which stood at 10.05%. While AT&C losses at the national level declined from 15.97% in the previous year, it still remains well above the global benchmark of around 7.5% that power distributors typically aim to achieve.

Torrent Power Surat topped the rankings in terms of AT&C losses, recording just 3.24%.

Other parameters

Across other operational parameters as well, private sector discoms continued to outperform their public sector counterparts. In billing efficiency, private utilities recorded 90.33%, higher than the 87.39% achieved by public sector discoms.

A similar trend was visible in collection efficiency, which measures the proportion of billed electricity revenue actually realised in cash. Private sector discoms reported a collection efficiency of 99.58%, compared with 96.80% for public sector utilities.

The gap was particularly stark in ‘days receivable’ — the average time taken to collect payments from consumers for electricity supplied. Private sector discoms recorded an average of 17 days, sharply lower than the 121 days reported by public sector discoms. The public sector figure also exceeded the all-India average of 112 days, underscoring persistent delays in revenue realisation.