Business Model for state-owned power distribution Companies for self-sustained power sector Veluchamy A1, Dr. Tripathi Rajesh2, Dr. Sunder Raju Ganesh3, Dr. Nafi R Mohamed4 1Senior General Manager, REC Ltd., Thiruvananthapuram Regional Office 2Assistant Professor (Sl. Gr), University of Petroleum & Energy Studies, Dehradun 3Professor and Director-CESD, Symbiosis International Deemed University, Lavale, Pune 4General Manager, REC Institute of Power Management and Training, Hyderabad Online Published on 21 June, 2022. Abstract In the post-liberalization era since 1991, several reforms have been implemented in India's power sector to address major challenges in the power sector, including a huge demand-supply gap, power outages, mounting financial losses of state power utilities, a large number of un-electrified villages, inefficiencies in power distribution, and rampant power theft. In addition, India's power sector has undergone a revolutionary change since the enactment of ‘The Electricity Act, 2003,’ which includes the introduction of competition and private sector investment into the power generation and transmission sectors, generation capacity quadrupling from 84,000 MW in 1997 to 3,88,000 MW now, power surpluses, electrification of all villages, and the establishment of a unified synchronous national grid. Despite multiple rounds of reforms in the power and distribution sectors and the grant of several reforms and bailout packages, state-owned DISCOMs continue to incur substantial financial losses. Sustained losses, mounting debt, erosion of net worth, and mounting payment defaults to power generation companies have made DISCOM's power supply business financially unviable and unsustainable. The prolonged deterioration of the state-owned DISCOMs’ financial health has impacted the generation and transmission sector and other sectors of the economy, including the banking and finance sector. As a result, it is hindering the nation's economic growth. Detailed research was conducted to discover the root cause of the state-owned DISCOMs’ chronic losses and make its business financially viable and sustainable. In addition, an in-depth study of the distribution business of TANGEDCO, Tamil Nadu's state-owned power utility, was conducted. The study concludes that the current business model of state-owned DISCOMs is no longer financially viable or sustainable. Thus, it is crucial to redesign its business models to ensure its financial viability. The study has diagnosed 56 independent variables and 17 latent variables that significantly contributed to the state-run DISCOMs’ sustained financial losses. Based on the identified factors contributing to the sustained financial losses of DISCOMs, the interrelationship between independent and latent variables, and the weaknesses of the present business model of DISCOMs, a Dynamic Business Model for Sustainability (DBMS) is designed and suggested to achieve a vibrant and sustainable power sector in India. Top |