Distribution companies are stressed with high indebtness and poor financial health and has been under financial glitch over last few years. One of the key concern has been inability of these discoms to improve their financial condition, around ₹844.45 billion stood as of October 2019. Some of the common woes faced by Discoms are increasing AT&C losses, poor collection efficiency, inadequate tariff adoption by SERC. UDAY scheme launched by government has tried to improve financial condition of discoms and reduce discom debts, but UDAy programme has not been successful in achieving said targets. Also Discoms are delaying payments to solar and wind energy developers, concerning developers and investors.
Discoms efficiency can be improved by adopting various private models like licensing, distribution franchisee and profit-sharing models. Through privatization, these distressed utilities may perform better and may enable them to increase revenues, reduce inefficiencies, and provide a better overall consumer experience.