Centre, States Discuss Power Distribution Reforms at 5th GoM Meeting

The Government of India’s Group of Ministers (GoM) on electricity distribution reforms held its 5th meeting in New Delhi on 16 September 2025 under the chairmanship of Union Minister of Power and Housing & Urban Affairs, Shri Manohar Lal. The high-level meeting brought together Union and State energy ministers, regulators, senior officials, and representatives of power utilities to deliberate on strategies for restoring the financial viability of distribution companies (discoms), ensuring reliable power supply, and enabling long-term sustainability of the power sector.

High-Level Participation

The meeting was attended by:

• Shri Shripad Yesso Naik, Union Minister of State for Power and New & Renewable Energy

• Shri Atul Save, Renewable Energy Minister, Maharashtra

• Shri A. K. Sharma, Energy Minister, Uttar Pradesh

• Shri S. S. Sivasankar, Energy & Transport Minister, Tamil Nadu

• Shri Hiralal Nagar, Minister of State for Energy, Rajasthan

Additionally, Shri Gottipati Ravi Kumar, Energy Minister of Andhra Pradesh, and Shri Pradyuman Singh Tomar, Energy Minister of Madhya Pradesh, joined the deliberations via video conferencing. Senior officials from the Ministry of Power, Central Electricity Authority (CEA), Power Finance Corporation (PFC) Ltd, and state power utilities were also present.

Addressing the Crisis in Power Distribution

Opening the session, the Secretary (Power), Government of India highlighted the urgent need for structural reforms to resolve the persistent debt crisis of discoms. He emphasized that reforms should be designed in such a way that improvements become irreversible, preventing any recurrence of debt traps.

The Union Minister of State for Power, recalling discussions from the first four GoM meetings, stressed the importance of regulatory reforms. He pointed to the need for coordinated interventions by both Central and State Governments to reduce discom debt and improve operational efficiency.

Chairing the meeting, Shri Manohar Lal underlined that the operational and financial health of discoms is critical for ensuring quality and affordable electricity supply to the public. He called for collaborative efforts between the Centre, States, and Regulatory Commissions, urging early installation of prepaid smart meters in all government establishments. He also reaffirmed the commitment to the goal of “Power for All, at All Times” in an efficient, sustainable, and cost-effective manner.

Causes of Discom Losses and Key Reform Measures

The Joint Secretary (Distribution) presented the core reasons behind the chronic un-viability of distribution utilities:

• High cross-subsidies increasing industrial power costs, affecting competitiveness

• Persistent financial losses, reducing private sector interest in the power sector

• Sub-optimal service delivery to consumers

Proposed reform measures included:

• Tariff rationalisation to ensure cost-reflective pricing

• Ensuring timely release of subsidies and payment of government dues

• Debt restructuring mechanisms to reduce liabilities of discoms

• Deployment of data analytics for power purchase optimization and demand forecasting

• Expansion of smart metering projects across states

It was also discussed that state governments may need to recognize discom debt as state liabilities, in order to resolve the financial distress.

Legislative Push: Electricity (Amendment) Bill

The Additional Secretary, Ministry of Power presented the contours of the proposed Electricity (Amendment) Bill, which seeks to:

• Create an enabling environment for financially viable utilities

• Promote ease of living and doing business

• Strengthen regulatory frameworks

• Support energy transition goals

• Optimize distribution network utilization

Moving Toward Consensus

The GoM agreed that Regulatory Commissions must issue full cost tariffs, with states providing subsidies where required. The need for mediation mechanisms in regulatory processes was emphasized to ensure timely resolution of disputes and discourage prolonged litigation.

The discussions also explored the draft contours of a new debt restructuring scheme for discoms, designed to stabilize their finances and restore investor confidence in the sector.

A Shared Commitment

Concluding the meeting, the Group of Ministers reiterated their collective commitment to implement bold and sustainable reforms for ensuring the financial viability of India’s distribution utilities. With cost-reflective tariffs, timely subsidies, and improved operational practices, the reforms aim to build a power sector that is efficient, financially resilient, and capable of delivering uninterrupted power to all citizens.