After years in the red, discoms buck trend, post Rs 2,701-crore profit

India’s power distribution companies have reported a collective Profit After Tax (PAT) of Rs 2,701 crore in FY 2024-25, reversing a long trend of losses and marking the first return to profitability since the unbundling of state electricity boards, officials said on Sunday.

The Power Ministry says the profit follows a steep loss of Rs 25,553 crore in FY 2023-24 and a far deeper loss of Rs 67,962 crore in FY 2013-14, underscoring what it described as a structural correction in the distribution sector.

Union Power Minister Manohar Lal Khattar said the return to profitability signalled a new chapter for the sector and attributed the shift to sustained reforms aimed at restoring financial and operational stability. He added that the government remained committed to strengthening the distribution network so the power sector could support India’s economic growth. According to the ministry, the turnaround has been driven largely by the Revamped Distribution Sector Scheme, under which infrastructure upgrades and the rollout of smart meters have improved billing efficiency and reduced power theft and leakages.

Tighter prudential norms have been introduced, linking access to finance for power utilities to performance against key operational benchmarks. The government said this had compelled distribution utilities to improve accountability and adopt fiscal discipline.

Amendments to electricity rules have also ensured timely tariff revisions, transparent subsidy accounting and improved cost recovery, reducing the financial stress that has long plagued state-run discoms.

The ministry said the Electricity Distribution (Accounts and Additional Disclosure) Rules, 2025, had standardised accounting practices across states, improving financial transparency and enabling more accurate assessment of utility performance.

One of the most significant outcomes of these reforms has been a sharp decline in outstanding dues to power generating companies. Under the Late Payment Surcharge rules, utilities have been pushed to clear liabilities on time. Outstanding dues fell 96 per cent, from Rs 1,39,947 crore in 2022 to Rs 4,927 crore by January 2026.

The average payment cycle has also improved, declining from 178 days in FY 2020-21 to 113 days in FY 2024-25, easing pressure on power producers and improving liquidity across the supply chain.

Key operational indicators have also shown measurable improvement. Aggregate technical and commercial losses have fallen from 22.62 per cent in FY 2013-14 to 15.04 per cent in FY 2024-25, reflecting gains in distribution efficiency.

Similarly, the gap between the average cost of supply and average revenue realised has narrowed from Rs 0.78 per unit in FY 2013-14 to Rs 0.06 per unit in FY 2024-25, indicating that utilities are now recovering most of their supply costs.

The Centre said it has consistently engaged with states to drive these reforms, including through a series of regional conferences of state and UT energy ministers held across the country in 2025.