Reduction in AT-C losses improves the finances of the utilities: Power ministry
Dec 05, 2022
New Delhi [India], December 5 : The reduction in aggregate technical and commercial (AT and C) losses improves the finances of the utilities, which will enable them to better maintain the system and buy power as per requirements, benefiting the consumers, the ministry of power on Monday said.
The Ministry said in a statement said that AT and C losses and average cost of supply and average realisable revenue (ACS-ARR) gap are key indicators of a discom's performance. In the last two years, the AT and C loss of the discoms of the country was hovering at 21-22 per cent. The Ministry instituted a number of measures to improve the performance of utilities, according to the statement.
Aggregate technical and commercial (AT and C) losses of discoms declined significantly to 17 per cent in 2021-22 (FY22) whereas the gap between average cost of supply and average realizable revenue declines from Rs 0.69/kWh in FY21 to Rs 0.22/kWh in FY22.
"Preliminary analysis of data for FY22 of 56 discoms contributing to more than 96 per cent of input energy, indicates that the AT and C losses of discoms have declined significantly to 17 per cent in FY22 from 22 per cent in FY21," the ministry said.
The Ministry of Power said the reduction in AT&C losses had resulted in reduction in the gap between average cost of supply (ACS) and average realisable revenue (ARR). The ACS-ARR gap (on subsidy received basis, excluding regulatory income and UDAY Grant) has declined from Rs 0.69/kWh in FY21 to Rs 0.22/kWh in FY22.
"The decline of 5 per cent in AT&C losses and 47 paise in the ACS-ARR gap in one year is the result of a number of initiatives taken by the ministry of power. On September 4, 2021, the ministry of power revised the prudential norms of PFC and REC, the lending agencies for the power sector to provide that loss-making discoms will not be able to avail financing from PFC and REC until and unless they draw up an action plan for reducing the losses within a specific timeframe and get their state government's commitment to it," the power ministry added.
The Ministry of Power said it also decided that any future assistance under any scheme for strengthening of the distribution system by the discoms will be available to a discom which is making losses only if it undertakes to bring its AT&C losses / ACS-ARR Gap down to specified levels within a specific timeframe and gets their state government's commitment to it.
The ministry further added the revamped distribution sector scheme laid down that funding under the scheme will be available only if the discom commits to an agreed loss-reduction trajectory. The ministry of power made a series of presentations before the 15th Finance Commission as a result of which 15th Finance Commission provided for an additional borrowing window to States contingent on their taking steps to reduce to their discoms' losses.
