Distressed discos, high demand: What’s ailing India’s energy sector?



In 2022, India experienced its worst electricity supply shortage in over six years. According to a Reuters report, areas from Jammu and Kashmir to Andhra Pradesh experienced power outages lasting 2 to 8 hours a day in April.

Energy Ministry data showed that Delhi, Haryana, Andhra Pradesh, Rajasthan, Kerala, Punjab and Bihar faced the worst of the energy crises. Most of this is due to these state governments promising to give citizens free electricity.

These promises result in delayed payments to the electricity generation companies (gencos) and electricity distribution companies (discoms). According to data from the Office of the Chief Economic Advisor (CEA), Indian states and union territories (UTs) owe the gencos over one trillion rupees.

Additionally they owe the discos Rs 62,931 crore. Also, the discos have yet to receive Rs 76,337 crore in subsidies from the state governments.

Among the states, Maharashtra, Tamil Nadu, Andhra Pradesh and Telangana have the highest outstanding dues to the gencos, the data further revealed. By May 31, 2022, Maharashtra had to pay over Rs 21,500 crore to the Gencos. Tamil Nadu followed with contributions worth Rs 20,990.


Power Crisis in India

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For discos, Telangana owed the highest amount at Rs 11,935 crore. Maharashtra followed him with a due payment worth Rs 9,131 crore.

In India, the average transmission losses are over 20 percent. It’s much higher than the average of 5-8 percent in developed countries. To come close to this area, India needs to improve its infrastructure.

However, as deferred payments and outstanding fees rise, the Discoms and Gencos have limited options aside from reducing their operational costs. Thus, a vicious circle of high waste and low availability exists in the energy sector.

Recently, however, smart meters have emerged as a way to reduce power consumption. In Uttar Pradesh, this has reduced disco bills by 36 percent. In a pilot project in Andhra Pradesh, a consumption reduction of 36 percent was determined.

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