NEW DELHI: Government think-tank Niti Aayog has recommended that state-owned power distribution companies (discom) require greater operational and financial autonomy if they were to succeed. There should be a clear separation between the utility and state, it added.
The recommendations were made as part of a report titled 'Turning Around the Power Distribution Sector', where the think-tank observed that Niti the performance of state-owned discoms is also determined by the ability of the respective State Electricity Regulatory Commissions (SERC) to revise tariff frequently and adequately. "Good corporate governance practices, including the use of independent directors, can help ensure such separation," it added.
Niti Aayog pointed out that most discoms incur losses every year. During the last fiscal year, this loss is estimated at Rs 90,000 crore. "Due to these accumulated losses, discoms are unable to pay for generators on time, as of March 2021, an amount of Rs 67,917 crore was overdue," it said. The report also said that most distribution utilities make losses due to expensive long-term power purchase agreements, poor infrastructure, among others.