After recording losses for several consecutive years, power distribution utilities across the country posted a collective profit of Rs 2,701 crore in FY25, according to an official statement issued on Sunday.
Distribution companies (discoms), which have largely remained in the red since the unbundling and corporatisation of State Electricity Boards, had reported a loss of Rs 25,553 crore in FY24. Their losses stood even higher at Rs 67,962 crore in FY14, the Power Ministry said.
Commenting on the turnaround, Union Power Minister Manohar Lal said the development marked a new phase for the distribution sector and reflected the impact of sustained reform measures undertaken by the government.
“India is driving not only its growth but also the growth of the world, with the energy sector playing a significant role in this,” Lal said.
He added that the government remained committed to implementing necessary reforms to ensure the power sector supports India’s expanding economy and contributes to the vision of Viksit Bharat.
The ministry said the improvement was evident not only in the profit after tax (PAT) posted by discoms but also across several key performance indicators. Aggregate Technical and Commercial (AT&C) losses have steadily declined over the years, signalling structural improvements in the sector.
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AT&C losses reduced from 22.62 per cent in FY 2013-14 to 15.04 per cent in FY 2024-25, the statement said.
Similarly, the Average Cost of Supply-Average Revenue Realised (ACS-ARR) gap, a key measure of cost recovery, narrowed sharply from Rs 0.78 per unit in FY14 to Rs 0.06 per unit in FY25.
The ministry attributed the improvement to reforms such as the Electricity (Late Payment Surcharge) Rules, which have led to a 96 per cent reduction in outstanding dues payable to power generation companies. Outstanding dues fell from Rs 1,39,947 crore in 2022 to Rs 4,927 crore by January 2026, while payment cycles of distribution utilities shortened from 178 days in FY21 to 113 days in FY25.
Among the major initiatives driving the turnaround is the Revamped Distribution Sector Scheme (RDSS), which aims to improve the financial viability of discoms through infrastructure modernisation and accelerated smart metering.
In addition to policy interventions, the ministry said it has engaged extensively with states and Union Territories to push reforms. These discussions were led by Power Minister Manohar Lal during the Regional Conferences of Energy Ministers held in 2025 at Gangtok, Mumbai, Bengaluru, Chandigarh and Patna.
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