States should list gencos and discoms: Power Minister M L Khattar

He said Gujarat and Haryana are considering listing their power utilities

Citing that the country’s power sector would require investments to the tune of Rs 22 trillion in this decade, Union Minister for Power M L Khattar urged states to publicly list their profit-making entities.

 

“Those states which have good performing generating (gencos) or transmission companies (transcos) and even power distribution companies (discoms) should consider listing them on exchanges,” Khattar said at the concluding session of the State Power Ministers' conference in Delhi.

 

He said Gujarat and Haryana were considering listing their power utilities. “The first in line can be transcos, followed by gencos. Discoms are usually not financially healthy, so states should improve their prospects and rankings before considering their listing,” Khattar said.

 

Power transmission and distribution projects require bulk investment. While traditional sources like banks and financial institutions are available, states should expand their financing avenues, the minister said.

 

Khattar said he discussed the financial viability concerns around discoms with various states. “The current cumulative debt of discoms is Rs 6.84 trillion, and the accumulated losses stand at Rs 6.46 crore as of now. We discussed ways to bring it down. The primary target should be reducing the ACS-ARR gap. The gap has improved to Rs 0.21 per kWh in FY24, as per provisional accounts, from Rs 0.45 per kWh in FY23. The goal is to bring it down to zero,” the minister said.

 

The ACS-ARR gap indicates the difference between the cost of purchasing power and the cost of power supply or the financial losses. Aggregate Technical and Commercial (AT&C) losses, which indicate operational losses, increased to 17 per cent during FY24, compared to 15 per cent last year, he said.

 

He suggested that smart meter installations are an effective way to reduce operational and financial losses, and states should expedite these projects. “We have urged the states to proceed in a phased manner, starting with high-load to low-load customers,” he said, adding that to promote smart meters, states may offer a 5 per cent rebate to prepaid consumers.

 

Pankaj Agarwal, secretary at the power ministry, said the Centre discussed the resource adequacy plan with the states, urging them to plan for energy demand and supply up to at least 2030, or if possible, 2032.

 

Khattar said states should explore a variety of energy resources with priority to renewable energy sources. He urged states to identify potential sites for setting up nuclear power projects.

 

“Currently, 18 sites have been identified for setting up nuclear power capacity across the country. Nuclear power capacity is expected to grow from 8 Gw to 20 Gw by 2032. States located far from coal sources should consider setting up nuclear power plants at sites where coal-based thermal power plants have completed their life,” he said.