Telangana: Discoms asked to improve efficiency to come out of financial crisis

Hyderabad: With accumulated losses of the State-run distribution companies (DISCOMs) touching over Rs.65,000 crore, the Telangana State Electricity Regulation Commission (TGERC) has reportedly directed the Discoms to comply with the standard performance regulations to improve their efficiency.

Major issues like transmission and distribution losses, inadequate infrastructure and near obsolete equipment, besides an array of issues compelled the TGERC to direct Discoms to set right things and improve their financial position and efficiency, sources said. The mounting debt burden of the State-run distribution companies has become a major concern for the State government, which is looking for ways to bale them out of the crisis.

According to officials, the losses have reduced profitability of distribution companies, leading to resource constraints and making it tough to invest in infrastructure upgrades. The issue is grave in rural areas as the dearth of infrastructure in particular is affecting the quality and consistency of power supply.

To make up for the revenue gaps, Discoms have been borrowing from banks and other financial institutions to procure and pay for generators and in the process, they have been bearing the interest cost, officials said, adding that due to the cash crunch, the Discoms have been facing difficulties in making payments to generators due to which they have been taking working capital loans to meet the obligations.

Given the precarious situation, the TGERC has reportedly asked Discomsto go for standard performance regulation measures like going ahead with phase-wise limited automation and technology adoption, address skill gaps and workforce issues, improve revenue collections and adopt regulatory compliance and monitoring to bale them out of the dicey situation.

However, experts in the sector say that the subsidised power supply, which was often not being fully compensated by the government, was leading to revenue shortfalls. The inadequate tariff revisions due to political reasons was resulting in recovering the operational and maintenance costs. The dependence on thermal power plants and high power purchase costs were also impacting the power utilities and the government must address those issues, experts said.