Power DISCOMs turn profitable with Rs 2,701 crore PAT in FY25

India’s power distribution utilities, including DISCOMs and state power departments, have collectively posted a positive Profit After Tax (PAT) of Rs 2,701 crore in FY 2024-25, marking a major turnaround for a sector that has remained loss-making for years after the unbundling and corporatisation of State Electricity Boards.

The return to profitability in FY 2024-25 contrasts sharply with a PAT loss of Rs 25,553 crore in FY 2023-24 and a much larger loss of Rs 67,962 crore in FY 2013-14, underlining the scale of the improvement achieved over the past decade.

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Union Power Minister Manohar Lal said the development marked “a new chapter” for the distribution sector and was the outcome of sustained reforms undertaken to address long-standing structural and financial challenges faced by DISCOMs.

He attributed the achievement to the leadership and vision of Prime Minister Narendra Modi, citing the Prime Minister’s statement that India is driving not only its own growth but also contributing to global growth, with the energy sector playing a pivotal role. The Minister said the government remains committed to deepening reforms so that the power sector can support the country’s expanding economy and contribute to the goal of Viksit Bharat.

According to the Ministry of Power, the turnaround has been driven by a series of transformative initiatives in the distribution segment. These include the Revamped Distribution Sector Scheme (RDSS), aimed at improving financial viability through infrastructure modernisation and accelerated deployment of smart meters.

Additional prudential norms have linked access to finance for power utilities to performance benchmarks, encouraging greater fiscal and operational discipline. Amendments to the Electricity Rules have focused on timely cost adjustments, rational tariff structures and transparent subsidy accounting to ensure full cost recovery.

The introduction of the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2025, has brought uniform accounting standards and enhanced transparency across distribution utilities, strengthening financial governance. Meanwhile, the Electricity (Late Payment Surcharge) Rules have enforced contractual discipline and timely payments across the power value chain, supporting investment in new renewable energy projects.

States have also been incentivised to implement critical reforms through mechanisms such as the Additional Borrowing Scheme, which links enhanced borrowing limits to performance metrics in the power sector.

The impact of these reforms is visible beyond the headline profitability numbers. Aggregate Technical and Commercial (AT&C) losses have steadily declined from 22.62 per cent in FY 2013-14 to 15.04 per cent in FY 2024-25, reflecting improved efficiency and reduced losses.

Cost recovery has also improved significantly, with the Average Cost of Supply–Average Revenue Realised (ACS–ARR) gap narrowing from Rs 0.78 per unit in FY 2013-14 to just Rs 0.06 per unit in FY 2024-25.

Reforms such as the Late Payment Surcharge Rules have resulted in a 96 per cent reduction in outstanding dues to generating companies from Rs 1.39 lakh crore in 2022 to Rs 4,927 crore by January 2026. At the same time, average payment cycles of distribution utilities have shortened from 178 days in FY 2020-21 to 113 days in FY 2024-25.

The Ministry of Power said it has maintained close engagement with states and Union Territories over the past decade to drive distribution sector reforms. These efforts included regional conferences of energy ministers chaired by Manohar Lal in 2025 across Gangtok (North-East), Mumbai (West), Bengaluru (South), Chandigarh (North) and Patna (East), aimed at reviewing progress and resolving region-specific challenges.

The positive momentum is expected to continue, with further deliberations underway in a Group of Ministers constituted by the Union Power Minister and chaired by Minister of State for Power and New & Renewable Energy Shripad Naik. The group is examining additional measures to further strengthen the financial viability of distribution utilities.