The second meeting of the Group of Ministers (GoM), tasked with addressing the financial viability of electricity distribution utilities, was held in Mumbai, bringing together key leaders from the energy sector. The meeting was chaired by Shri Shripad Yesso Naik, Union Minister of State for Power and New & Renewable Energy, and attended by Maharashtra’s Chief Minister, Shri Devendra Fadnavis, along with energy ministers from Tamil Nadu, Uttar Pradesh, Andhra Pradesh, Rajasthan, and Maharashtra. Senior officials from the Central Government, state governments, power utilities, Power Finance Corporation (PFC) Ltd, and REC Ltd were also present.
The discussions centered on the urgent need to reform the power distribution sector, ensuring that it remains financially sustainable while meeting the growing energy demands of the country. The Union Minister of State, in his opening remarks, emphasized the critical challenges facing distribution utilities, particularly the Aggregate Technical and Commercial (AT&C) losses, the widening gap between the Average Cost of Supply and the Average Revenue Realized (ACS-ARR Gap), accumulated losses, and outstanding debts. He pointed out that even a 1% increase in AT&C losses translates to financial setbacks exceeding ₹10,000 crore for utilities.
A key focus of the meeting was the role of renewable energy in lowering power costs. Maharashtra and Rajasthan were commended for their initiatives in leveraging renewable energy sources to bring down costs and enhance efficiency. The Union Minister also stressed the importance of incorporating advanced technologies such as Artificial Intelligence for demand forecasting and power purchase optimization, ensuring timely payments of government dues, and promoting best practices among Distribution Companies (DISCOMs). Additionally, the expansion of renewable energy storage and fast-tracking projects under the Revamped Distribution Sector Scheme (RDSS) were identified as vital steps toward strengthening the sector.
Maharashtra’s Chief Minister expressed gratitude for hosting the crucial meeting and highlighted the efforts undertaken by the state to improve power distribution. He underscored the importance of expanding renewable energy sources in tandem with energy storage solutions to address future energy transition challenges. He cited the success of the Mukhyamantri Saur Krishi Vahini Yojana, which provides daytime power to farmers, thereby reducing electricity costs and the state’s subsidy burden. He further noted Maharashtra’s commitment to solarizing all agricultural load feeders, which would significantly reduce costs and dependency on traditional power sources.
The Chief Minister assured that Maharashtra is actively working to improve its AT&C loss figures and acknowledged the progress made under RDSS. He called for additional support from the Central Government, including the early release of Gross Budgetary Support (GBS), the revival of schemes like UDAY (Ujjwal DISCOM Assurance Yojana), and the reduction of interest rates and prepayment charges levied by PFC Ltd. and REC Ltd. He also urged for regulatory flexibility to allow surplus revenues from DISCOMs to be directed towards infrastructure development before being allocated elsewhere.
A detailed presentation was given by the Joint Secretary (Distribution), Ministry of Power, outlining the financial and operational status of various states. The meeting also explored strategies to mitigate outstanding debts and losses within distribution utilities and bring them back to profitability. The state of Gujarat, invited as a special participant, shared insights into its successful approach to making DISCOMs financially sustainable.
Member states actively participated, sharing their perspectives and presenting an overview of their respective DISCOMs. Maharashtra, Tamil Nadu, Uttar Pradesh, Andhra Pradesh, and Rajasthan highlighted their ongoing reforms, best practices, and future strategies to enhance efficiency and financial viability. PRAYAS, a policy research group, also provided a presentation suggesting necessary reforms to ensure a financially sustainable power distribution sector.
Reaffirming their commitment to resolving the financial difficulties faced by DISCOMs, the ministers and officials agreed on the need for concrete action. In his closing remarks, the Union Minister of State expressed appreciation for the valuable inputs and suggestions provided by the states, emphasizing that these would guide future policies. He urged all member states to work on the key action points identified during the meeting.
Looking ahead, the Group of Ministers unanimously decided to convene the third meeting in Uttar Pradesh in March, continuing their efforts to strengthen the power distribution sector and secure a more sustainable energy future for the country.
