New Delhi: Recent improvements in the payment discipline of state-owned electricity distribution companies (discoms) are supporting near-term cash flow visibility for power generators, although the sustainability of these gains will depend on continued reform support from the central government and progress in addressing structural weaknesses in the sector, according to Moody's Ratings.
The ratings agency said the distribution sector has shown a marked improvement in key operational metrics in recent years.
The gap between average cost of supply and average revenue realised (ACS-ARR) narrowed sharply to Rs 0.06/unit in FY25 from Rs 0.69/unit in FY21, while aggregate technical and commercial losses fell to 15% from 21.9% over the same period. The sector also reported a consolidated profit after tax of around Rs 27 billion in FY25, the first such profit since the unbundling of State Electricity Boards.
However, the performance remains uneven across states. The agency said that 20 out of 31 states continue to report ACS-ARR gaps above the state discom average, while only Gujarat and West Bengal have accumulated surpluses.
According to the report, the late payment surcharge rules introduced in 2022 have strengthened payment discipline and cut receivables pressure for power generators.
The ratings agency said the distribution sector has shown a marked improvement in key operational metrics in recent years.
The gap between average cost of supply and average revenue realised (ACS-ARR) narrowed sharply to Rs 0.06/unit in FY25 from Rs 0.69/unit in FY21, while aggregate technical and commercial losses fell to 15% from 21.9% over the same period. The sector also reported a consolidated profit after tax of around Rs 27 billion in FY25, the first such profit since the unbundling of State Electricity Boards.
However, the performance remains uneven across states. The agency said that 20 out of 31 states continue to report ACS-ARR gaps above the state discom average, while only Gujarat and West Bengal have accumulated surpluses.
According to the report, the late payment surcharge rules introduced in 2022 have strengthened payment discipline and cut receivables pressure for power generators.