Financial deficit of power distribution sector at highest ever: PFC

Annual rating reveals absolute cash-adjusted losses increased by 10% in the sector between FY19 and FY21

The financial health of the power distribution companies (discoms), which improved slightly in recent years, has been hit again, the annual rating of discoms by financing agency Power Finance Corporation (PFC) revealed. The financial deficit in the sector is “larger than previously recorded” and is widening because of declining profitability of discoms, it said.

The absolute cash-adjusted gap of the power distribution sector averaged around Rs 1.04 trillion and is nearly 1.4 times the recorded losses.

The report highlighted that sustained losses of the discoms have led to a liquidity crunch in the power distribution sector. It said the discoms’