Power distribution utilities post positive profit after years of losses
According to the Ministry of Power, multiple initiatives have contributed to the improved financial position of distribution utilities.
New Delhi: India’s power distribution utilities have collectively reported a positive profit after tax (PAT) of ₹2,701 crore in FY 2024–25, marking a significant turnaround for a sector that has recorded losses for more than a decade following the unbundling and corporatisation of state electricity boards.
The latest figures contrast sharply with a consolidated loss of ₹25,553 crore in FY 2023–24 and ₹67,962 crore in FY 2013–14, reflecting sustained improvements in financial and operational performance across distribution companies and power departments.
Commenting on the development, union power minister Manohar Lal said the return to profitability marks a new chapter for the distribution sector and is the outcome of a series of structural reforms undertaken over the years to address long-standing inefficiencies.
The minister attributed the progress to policy reforms and improved governance, noting that the power sector is expected to play a central role in supporting India’s economic growth trajectory, as articulated by prime minister Narendra Modi.
Reforms driving the turnaround
According to the Ministry of Power, multiple initiatives have contributed to the improved financial position of distribution utilities. These include the Revamped Distribution Sector Scheme (RDSS), which focuses on infrastructure modernisation and smart metering, and additional prudential norms that link access to finance with performance benchmarks.
Regulatory measures such as amendments to electricity rules, uniform accounting and disclosure norms for distribution utilities, and the enforcement of late payment surcharge rules have aimed to ensure timely cost recovery, transparent subsidy accounting and improved payment discipline across the power value chain.
States have also been incentivised to undertake reforms through conditional borrowing limits tied to performance metrics under the additional borrowing framework.
Key performance indicators improve
The impact of these reforms is reflected in key operational indicators. Aggregate technical and commercial (AT&C) losses declined from 22.62% in FY 2013–14 to 15.04% in FY 2024–25, indicating improved efficiency in billing, collection and network management.
The gap between average cost of supply and average revenue realised (ACS–ARR) narrowed from ₹0.78 per unit in FY 2013–14 to ₹0.06 per unit in FY 2024–25, signalling near cost-reflective tariffs at the sector level.
Outstanding dues of distribution utilities to generating companies fell by 96%, from ₹1.39 lakh crore in 2022 to ₹4,927 crore by January 2026. Over the same period, average payment cycles improved from 178 days in FY 2020–21 to 113 days in FY 2024–25.
Officials said sustained engagement with states and union territories, including regional conferences of energy ministers held across the country in 2025, has played a key role in driving the turnaround.
The ministry expects the momentum to continue, with further recommendations under deliberation by a group of ministers constituted to address the long-term financial viability of distribution utilities.
