SRINAGAR: The cost of buying electricity continues to dominate Jammu and Kashmir’s energy finances, with the Union Territory spending about Rs 8,254 crore annually on power purchases, a figure that now accounts for nearly 87 per cent of the total expenditure of the power sector. The latest Economic Survey describes this mounting purchase bill as the single biggest pressure point for the department, shaping both tariff policy and the government’s wider fiscal calculations.
With demand for electricity rising steadily across households, businesses and public services, local generation has not kept pace, forcing the administration to depend heavily on allocations from central generating stations and market procurement. This dependence has steadily inflated costs and left less room for investments in strengthening transmission lines, upgrading infrastructure and expanding supply networks.
Against the rising outgo, revenue recovery remains limited. The department’s tariff collections are estimated at about Rs 4,908 crore, leaving a wide gap between what the government pays to procure electricity and what it earns from consumers. This under-recovery has to be bridged through budgetary support and is cited in the survey as one of the recurring contributors to the Union Territory’s fiscal deficit.
Officials say the structural mismatch between procurement costs and billing realisations has persisted for years. Even as supply improves and consumption grows, the financial health of the sector remains fragile because a large portion of expenditure is locked into fixed purchase agreements, while collections depend on efficiency of metering and payment compliance.
Energy use in Jammu and Kashmir has increased substantially over time. Total consumption has reached around 24,487 million units, while peak demand has touched 3,501 megawatts. These numbers reflect expanding electrification, growth in domestic connections and rising commercial activity, but they also mean that the government must secure larger volumes of power each year at considerable cost.
To contain losses and improve collections, the administration has accelerated reforms under the Revamped Distribution Sector Scheme. Smart metering has been rolled out across many urban and semi-urban areas to ensure accurate billing and reduce unaccounted consumption. According to the survey, these measures have begun to improve the financial position by strengthening billing systems and boosting recoveries.
The results are visible in operational indicators. Aggregate Technical and Commercial losses, which include energy lost due to transmission inefficiencies, theft and billing gaps, have fallen to about 41.6 per cent. Collection efficiency has improved to around 96.7 per cent, meaning that most of the billed amount is now being realised. Billing efficiency has also risen, suggesting that more connections are being properly metered and recorded.
Despite these gains, the survey notes that losses remain high compared to national norms. A loss level above 40 per cent implies that a significant share of purchased power does not translate into revenue, effectively increasing the burden on the exchequer. Reducing these losses further is seen as critical to making the sector financially sustainable.
Parallel efforts are underway to upgrade infrastructure. Substations, feeders and transformers are being modernised to improve reliability and reduce technical breakdowns. Network strengthening in rural and remote areas is also intended to bring more consumers into the formal billing system, thereby widening the revenue base.
The government is also looking to expand local generation, particularly hydroelectric power, to cut dependence on costly external purchases over the long term. With significant untapped hydropower potential, officials believe that increasing in-house production could stabilise procurement costs and ease pressure on tariffs and subsidies.
Overall, the energy chapter portrays a sector caught between growing demand and financial constraints. While reforms in metering, billing and infrastructure are beginning to yield results, the heavy power purchase bill continues to overshadow the balance sheet. Until the gap between procurement costs and tariff recoveries narrows substantially, electricity will remain one of the most resource-intensive and fiscally sensitive areas of Jammu and Kashmir’s administration.
