Government plans stock listings for five power firms, considers Discom privatisation

The Indian government is gearing up for major power sector reforms, with plans to list five state-owned power generation and transmission companies on the stock market. This move aims to attract fresh investments to boost capacity and improve financial stability.

Who’s on the List?

According to reports, Andhra Pradesh Power Generation Corporation and Gujarat Energy Transmission Corporation are among the five companies preparing for stock market debut. Merchant bankers are being appointed to facilitate the process.

Privatisation on the Horizon?

In a bid to strengthen the power distribution sector, the government is also exploring the privatisation of state-run distribution companies (discoms). Many discoms struggle with financial losses due to rising power procurement costs, high transmission and distribution (T&D) losses, and delayed consumer payments.

At a recent regional meeting, several states sought central support in privatising their distribution utilities, believing it would enhance service efficiency and reliability. While the government is willing to help with the transition, a financial bailout is not on the table.

A Step Towards Stock Exchange Listing

The government is also evaluating the possibility of listing certain discoms on the stock exchange. However, this would depend on their ability to reduce accumulated losses.

The Financial Snapshot

Discoms' total losses in 2023-24: Rs 6.92 trillion

Outstanding debt: Rs 7.53 trillion

Improvement: The gap between average cost of supply (ACS) and average revenue realized (ARR) has narrowed significantly, from 45 paise per kWh in 2022-23 to 19 paise in 2023-24, and further down to 0.10 paise by January 2025.

As power sector reforms take shape, the government’s focus remains on making state-owned companies more financially viable, reducing inefficiencies, and encouraging private participation to ensure a sustainable and efficient energy supply.