J&K power DISCOMs yet to generate own revenue, Govt bears cost: CAG

Srinagar, Apr 20: The much-publicised restructuring of Jammu and Kashmir’s power sector has failed to translate into functional autonomy on the ground, with the Comptroller and Auditor General (CAG) observing that the region’s distribution companies remain “operational merely on paper.”

According to the audit findings, the supply of electricity to consumers was still handled departmentally until 2020. A structural shift was initiated through S.O 109 dated March 20, 2020, under which the distribution of power was transferred to two entities—Jammu Power Distribution Company Ltd (JPDCL) and Kashmir Power Distribution Company Ltd (KPDCL).

However, the report makes it clear that the transition has not been supported by any actual financial or operational controls.

“The function of supply of electricity to consumers was handled departmentally up to 2020… However, expenditure on the purchase of power is still being made from Government accounts and receipts on account of power are also being credited to Government accounts,” the CAG states.

It further notes that “DISCOMs are neither incurring expenditure on purchase of power nor collecting revenue on account of sale of power to consumers,” indicating that the core financial functions continue to lie with the government.

The government, as per the report, continues to fund and execute works on behalf of these companies. “Government is keeping provision in the budget and incurring expenditure on works of DISCOMs by debit to Major Head 4801,” it says, adding that an amount of Rs 539.22 crore was spent during 2024–25 alone under this head.

The audit draws a pointed conclusion: “It shows that DISCOMs are operational merely on paper. The role of distribution of power is still managed and controlled by the Government.”

The financial data further underlines the stress in the sector. For the period 2020–2025, the purchase of power amounted to Rs 8,015 crore, while receipts on account of power stood at Rs 4,908 crore, highlighting a substantial gap between expenditure and revenue.

Beyond this, the report flags rising liabilities through off-budget borrowings. “In addition to the above expenditure, Jammu and Kashmir Power Corporation Limited has raised off-budget loans which are repaid from the government budget,” the CAG notes. “An amount of ₹21,960 crore on account of such loans was outstanding as of the end of March 2025.”

In its response to the audit observations, the government acknowledged the continued dependence. “In reply, it was stated in January 2026 that since DISCOMs are still not in a position to generate adequate revenue to meet their expenditure obligations, this arrangement is continuing.”

The findings cast a shadow over the effectiveness of power sector reforms in Jammu and Kashmir, raising concerns over delayed financial independence, mounting liabilities, and the continued strain on public finances despite the creation of separate distribution companies.