Financial turnaround of discoms: After years of losses, profit recorded in FY25
- January 19, 2026
The country’s power distribution utilities (discoms) and power departments have collectively recorded a positive profit after tax of Rs.2,701 crore in year FY25, a government release said.
The release pointed out that discoms (including power departments) as a whole have been reporting PAT (profit after tax) losses for past several years since the unbundling and corporatization of erstwhile state electricity boards.
The PAT recorded in FY25 therefore marks a turning point for the sector, the release observed.
The positive PAT of Rs.2,701 crore returned in FY25 compares favourably to a loss of Rs.25,553 crore in FY24 and a loss of ₹67,962 crore in FY14.
According to Manohar Lal, Union Minister of Power said that this marks a new chapter for the distribution sector and is a result of several steps that have been taken to redress the concerns of the distribution sector.
Transformative initiatives
Some of the transformative initiatives in the distribution sector include:
- Revamped Distribution Sector Scheme (RDSS): Enhancing financial viability through infrastructure modernization and accelerated smart metering.
- Additional Prudential Norms: Linking access to finance for Power sector Utilities to achievement against performance benchmarks to promote fiscal and operational discipline.
- Amendments to Electricity Rules: Enforcing timely cost adjustments, prudent tariff structures, and transparent subsidy accounting to ensure full cost recovery.
- Electricity Distribution (Accounts and Additional Disclosure) Rules, 2025: Introducing uniform accounting and enhanced transparency across Distribution utilities for improved financial governance.
- Late Payment Surcharge (LPS) Rules: Enforcing legal contracts through timely payments in the power sector thereby supporting investment in new RE projects.
- Additional Borrowing Scheme: Incentivizing states to implement critical power sector reforms, with borrowing limits tied to performance metrics as part of Additional Borrowing Scheme.
Improvement in indicators
Apart from positive PAT, other favourable performance indicators include:
- Reduction in AT&C losses from 22.62 per cent in FY14 to15.04 per cent in FY25
- Narrowing of ACS-ARR gap from Rs.0.78 per kWh in FY14 to Rs.0.06 per kWh in FY25
- Reduction in outstanding dues from Rs.1,39,947 crore in 2022 to just Rs.4,927 crore by January 2026
- Fall in distribution utility payment cycles from 178 days in FY21 to 113 days in FY25
Concerted efforts
The Ministry of Power has put in concerted efforts over the past decade to improve the performance of distribution utilities across the country. In addition to the different policy initiatives, extensive engagements with States and UTs have emphasized reforms in the distribution sector, the release said.
This momentum is expected to be sustained as a result of the deliberations underway in the Group of Ministers constituted by Union power minister Manohar Lal under the chairmanship of Union Minister of State for Power and New & Renewable Energy, Shripad Naik on the matter of improving financial viability of disoms.
Note: AT&C losses = Aggregate technical & commercial losses; ACS = Average cost of supply; ARR = Average revenue realization
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