The Comptroller and Auditor General of India (CAG) has started a four-year integrated audit of the power sector, starting with a performance audit of power distribution companies (DISCOMs) in all States, where accumulated losses stand at Rs 3,41,609 crore. It will also include findings from consumer confidence surveys to be held across the country.
Data review indicated that the financial stress is primarily rooted in weaknesses in procurement, demand forecasting, metering, regulatory accounting and consumer service, it said on Thursday. The performance audit on ‘Operational and Financial Performance’ will cover 39 public sector discoms across states and Union Territories. Five State/UT power departments will be covered.
The audit watchdog stated that as of March 31, 2025, 24 DISCOMs had negative net worth. Outstanding borrowings stood at Rs 7,26,378 crore, with an interest burden of Rs 77,653 crore. In 2024-25, 41 DISCOMs earned aggregate profits of Rs 32,661 crore, while 23 incurred aggregate losses of Rs 29,959 crore. The PFC rating covers 73 DISCOMs, comprising 44 public-sector, 17 private-sector and 12 State/UT power departments, with PFC data available for 65.
Aggregate technical and commercial (AT&C) losses stood at 15.04 per cent nationally, just above the Revamped Distribution Sector Scheme (RDSS) target of 12-15 per cent. State-level losses ranged from 3.63 per cent to 48.86 per cent, and 27 DISCOMs failed to meet the benchmarks. Between 2020-21 and 2024-25, capital grants rose 16.0 per cent, from Rs 1,07,739 crore to Rs 1,25,016 crore, while revenue grants rose 69.4 per cent, from Rs 55,544 crore to Rs 94,095 crore.
“Revenue grants have grown more than four times as compared to the increase in capital grants,” the CAG said, adding that Government support is increasingly meeting the cost of losses, debt and interest rather than investment.
The audit will cover generation, transmission, distribution and renewable energy over four years. Distribution has been prioritised in the first year because of its direct interface with consumers and its spillover effects on State finances through subsidies, guarantees and equity support. “We have planned certain innovations in the audits. One of the focus areas will be a consumer satisfaction survey covering 10,000 respondents across the states and UTs to be covered,” the official said.
The consumer satisfaction assessment is being undertaken to evaluate the quality of electricity services delivered by DISCOMs and the level of satisfaction among different categories of consumers, including domestic, industrial, commercial, and agricultural consumers.
The performance audit, titled “Operational and Financial Performance of DISCOMs”, is being conducted by Field Audit Offices (FAOs) in each State. The audit reports are likely to be tabled in the respective state legislatures during the second part of the next financial year.
In addition to AT&C losses, billing efficiency, collection efficiency, and power supply performance, the audit will assess DISCOMs’ financial health and sustainability.