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<p>Union Minister R.K. Singh replied to a question in the Rajya Sabha on whether the government has reviewed the assistance provided to states and power distribution companies (DISCOMs) under the Ujwal Discom Assurance Yojana (UDAY) program.</p>
<p>The minister informed that the Aggregate Technical &amp; Commercial (AT&amp;C) losses at the all India level have reduced from 23.70% in financial year (FY) 2015-16 to 21.83% in FY 2019-20, an 2% reduction in the five years.</p>
<p>While 18 DISCOMs witnessed a decline in AT&amp;C losses, 12 DISCOMs saw an increase in AT&amp;C losses between FY 2016 and 2020.</p>
<p>In February 2018, Mercom had <a href="https://mercomindia.com/states-atc-loss-uday/" target="_blank" rel="noopener">reported</a> that AT&amp;C losses for the states and union territories under the UDAY had program increased from the previous year, according to government data. Ironically, the UDAY program was launched in the country to reduce the losses incurred by the distribution companies.</p>
<p>In its reply to the Rajya Sabha last month, the minister shared state-wise details regarding AT&amp;C losses between FY 2015-16 and FY 2019-20.</p>
<p><a href="https://mercomindia.com/wp-content/uploads/2021/08/State-Wise-ATC-Loss-1-3.png"><img class="aligncenter size-full wp-image-28208" src="https://mercomindia.com/wp-content/uploads/2021/08/State-Wise-ATC-Loss-1-3.png" alt="State-Wise AT&amp;C Loss (%)" width="512" height="873" srcset="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/State-Wise-ATC-Loss-1-3.png 512w, https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2021/08/State-Wise-ATC-Loss-1-3-176x300.png 176w" sizes="(max-width: 512px) 100vw, 512px" /></a></p>
<p>During the five years, AT&amp;C losses in Mizoram fell sharply by 41%, followed by Haryana (38%) and Manipur (36%).</p>
<p>Meanwhile, AT&amp;C losses in Telangana surged by 71% during the five years, followed by Nagaland (58%) and Chhattisgarh (26%).</p>
<p>In March 2019, Mercom had reported that ₹5.75 billion (~$77.46 million) given to six states (Gujarat, Rajasthan, Jharkhand, Punjab, Telangana, and Kerala) to curtail their AT&amp;C losses remained <a href="https://mercomindia.com/5-75-billion-six-states-a-c-losses-unutilized/" target="_blank" rel="noopener">unutilized</a>.</p>
<p>The Power Finance Corporation (<a href="http://www.pfcindia.com/" target="_blank" rel="noopener">PFC</a>) had written to these six states regarding the timely completion of implementing the supervisory control and data acquisition (SCADA) /distribution management system (DMS) under the government’s Restructured Accelerated Power Development and Reforms Program (R-APDRP) to enhance reliability in the power distribution network.</p>
<p>During the five years between FY 2016 and 2020, Gujarat’s AT&amp;C losses fell by 26%, Rajasthan’s losses were down by 6%, and Punjab’s losses were down by 10%. Jharkhand’s losses surged by 11%. As mentioned above, Telangana’s losses are the highest across the country.</p>
<p>In June this year, Union Finance Minister Nirmala Sitharaman had <a href="https://mercomindia.com/finance-minister-announces-%e2%82%b93-03-trillion-upgrading-discoms/" target="_blank" rel="noopener">announced</a> the ‘Economic Relief from Pandemic’ package and declared several sops for DISCOMs, including ₹3.03 trillion (~$40.82 billion) outlay for reform-based result-linked power distribution program.</p>
<p>Last month, the MOP <a href="https://mercomindia.com/ministry-power-plan-revamp-discoms/" target="_blank" rel="noopener">issued</a> detailed guidelines for reform-based result-linked power distribution programs over the next five years.</p>
<p>The program aims to improve power supply quality and reliability through a financially sustainable and operationally efficient distribution sector. The plan is to reduce the aggregate technical and commercial (AT&amp;C) losses across India to 12-15% and eliminate the gap between the average supply cost and the aggregate revenue requirement by 2024-25.</p>
<p>&nbsp;</p>
<p><em>Note: Percentage in the title has been updated from 8% to 2%</em></p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://mercomindiatest.slashdev.io/author/rahul-nair/" class="vcard author" rel="author" itemprop="url"><span class="fn" itemprop="name">Rahul Nair</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><p><img class="alignleft" src="https://mercomindia.com/wp-content/uploads/2022/02/Rahul-Nair.png" width="86" height="102" />Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. <a href="https://mercomindia.com/author/rahul-nair/" rel="noopener noreferrer">More articles from Rahul Nair.</a></p>
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AT&C Losses Among Distribution Companies Dips by 2% Between FY 2016 and 2020

<p>Reform-linked borrowings have provided the necessary impetus for reforms in the power sector in many states in the country. According to the latest figures released by the <a href="https://finmin.nic.in/" target="_blank" rel="noopener">Ministry of Finance</a>, five more states &#8211; Bihar, Goa, Karnataka, Rajasthan, and Uttarakhand &#8211; have met the target of reduction in Aggregate Technical and Commercial (AT&amp;C) losses or achieved the targeted reduction in Average Cost of Supply and Average Revenue Realization (ACS-ARR) gap.</p>
<p>The reduction of AT&amp;C losses and ACS-ARR gap are two of the three reforms put forward by the Ministry of Finance. The borrowing cap for the states is linked to undertaking reforms in the power sector. The states are eligible to borrow an amount equal to 0.05% of the gross state domestic product (GSDP) for meeting the reduction in AT&amp;C losses and an additional 0.5% for meeting the ACS-ARR gap target.</p>
<p>Uttarakhand led the way in both the reduction in AT&amp;C losses and the ACS-ARR gap. The state achieved the target of 19.01% for the AT&amp;C losses as against the target of 19.35%. For the ACS-ARR gap target, the state achieved a figure of ₹0.36 (~$0.0048)/kWh as against the target of ₹0.40 (~$0.0054)/kWh. Goa was another state that brought the AT&amp;C losses to 11.21% as against the target of 13.53%.</p>
<p>Karnataka reduced the ACS-ARR gap to ₹0.44 (~$0.0059)/kWh compared to the target of ₹0.50 (~$0.0067)/kWh. Rajasthan also achieved the target and reduced the gap to ₹1.16 (~$0.015)/kWh compared to the target of ₹1.40 (~$0.018)/kWh.</p>
<p>Meeting the reform requirements has made these states eligible to mobilize additional resources of ₹20.94 billion (~$283.2 million), which have helped them fight the COVID-19 pandemic and enhance capital expenditure.</p>
<p>Andhra Pradesh and Madhya Pradesh have undertaken the third reform in the power sector, the Direct Benefit Transfer of electricity to farmers. Consequently, the two states were permitted additional borrowings of ₹29.38 billion (~$397.37 million). As of now, the seven states which have undertaken power sector reforms have been permitted additional borrowings of ₹50.32 billion (~$680.59 million).</p>
<p>The power sector reforms introduced by the Ministry of Finance aim at creating a hassle-free and transparent process in place for providing power subsidies to farmers and prevent leakages. The reforms also aim at improving the health of the distribution companies (DISCOMs) sustainably by providing them liquidity.</p>
<p>To help the states fight the challenges posed by the COVID-19 pandemic, the central government had increased the states&#8217; borrowing limits to 2% of their GSDP.</p>
<p>In all, 21 states have carried out at least one reform measure and have been granted reform-linked borrowings. The total reform-linked additional borrowing permission to states stood at ₹916.67 billion (~$12.39 billion).</p>
<p>In September last year, the Andhra Pradesh government decided to <a href="https://mercomindia.com/farmers-andhra-pradesh-power-subsidies/" target="_blank" rel="noopener">introduce</a> the Direct Benefit Transfer on the subsidy extended as free electricity to farmers. The decision came after the central government <a href="https://mercomindia.com/electricity-act-amendment-draft/" target="_blank" rel="noopener">issued</a> a draft proposal for the amending the Electricity Act 2003 to address issues in the power sector.</p>
<p>Earlier, Mercom <a href="https://mercomindia.com/5-75-billion-six-states-a-c-losses-unutilized/" target="_blank" rel="noopener">reported</a> that the Power Finance Corporation had written to six states about implementing the supervisory control and data acquisition (SCADA)/distribution management system under the government&#8217;s Restructured Accelerated Power Development and Reforms Program (R-APDRP) to enhance reliability in the power distribution network.</p>
<div class="saboxplugin-wrap" itemtype="http://schema.org/Person" itemscope itemprop="author"><div class="saboxplugin-tab"><div class="saboxplugin-gravatar"></div><div class="saboxplugin-authorname"><a href="https://mercomindiatest.slashdev.io/author/rakesh-ranjan-parashar/" class="vcard author" rel="author" itemprop="url"><span class="fn" itemprop="name">Rakesh Ranjan</span></a></div><div class="saboxplugin-desc"><div itemprop="description"><div class="designboxt">
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<p><strong style="text-decoration: underline">Rakesh Ranjan,</strong> Staff reporter at Mercom India<br />
<a href="https://mercomindia.com/author/rakesh-ranjan-parashar/" target="_blank" rel="noopener">More articles from Rakesh Ranjan.</a></p>
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<p><img class="alignleft" src="https://mercomindia.s3.ap-south-1.amazonaws.com/wp-content/uploads/2022/02/Rakesh-Headshot-crop-2.jpg" width="77" height="102" /><a href="https://mercomindia.com/author/rakesh-ranjan-parashar/" target="_blank" rel="noopener"><strong style="color: #00b451">Rakesh Ranjan</strong></a> is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU). <a href="https://mercomindia.com/author/rakesh-ranjan-parashar/" rel="noopener noreferrer">More articles from Rakesh Ranjan.</a>
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Five More States Become Eligible for Power Sector’s Reform-Linked Borrowings

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