ISLAMABAD – The performance of state-owned power distribution companies (DISCOs) and K-Electric has further deteriorated as none has met NEPRA’s Transmission & Distribution losses/recoveries targets, and incurred losses of Rs1.223 trillion during FY2023-24.
The total losses on account of Transmission & Distribution losses and less recoveries by Discos/KE has resulted in a loss of Rs661 billion to the national exchequer, and added to the circular debt, while Rs562 billion losses, which falls within NEPRA allowed target, were billed to the consumers.
In FY2023-24, Discos’ performance deteriorated, with T&D losses rising to 18.08 percent, up from 16.38% in FY 2022-23. Despite NEPRA setting a target of 12.15% for T&D losses, the actual losses exceeded the target by a significant 5.93%, said NEPRA performance evaluation report of XWDiscos and KE for FY2023-24. Out of 18.08 percent T& D losses, 12.15 percent were billed to the consumers, while the remaining 5.93 percent were added to the circular debt.
Despite NEPRA’s consistent guidance and directives for DISCOs to reduce these losses and meet specified targets, none of the distribution companies has achieved the required limits. As a result, these losses have led to an estimated Rs281 billion drain on the national exchequer. PESCO, LESCO, QESCO, and SEPCO are the largest contributors to this financial shortfall, accounting for Rs96 billion, Rs47.5 billion, Rs37 billion, and Rs28.7 billion, respectively.
Regarding recoveries, the report said that NEPRA has made billing and collection a key performance indicator for DISCOs, setting a target of 100% recovery to ensure financial health and sustainability. None of the DISCOs achieved the target of 100% recovery in FY2023-24. IESCO, GEPCO, FESCO, LESCO and MEPCO came closest, with recovery rates between 96% and 97%. PESCO and K-Electric have also executed more than 90% recoveries. However, HESCO has showed little improvement, with recovery rates of 76.40%. Whereas, QESCO & SEPCO had the poorest performance, with a recovery rate of just 65.41% and 31.76%, even lower than the previous year.
The overall recovery rate of 92.18% in FY 2023-24 is concerning, especially in the context of rising circular debt, high T&D losses, and the growing per-unit cost of electricity. In FY2023-24, DISCOs collected Rs4,486.557 billion against a billed amount of Rs4,867.359 billion, resulting in a revenue shortfall of approximately Rs380.802 billion, about 150% higher than the previous year’s loss of Rs236 billion. The share of all DISCO’s revenue loss is around Rs315 billion out of the total loss of Rs380 billion. This loss will be absorbed by the national exchequer or the consumers in term of surcharges. QESCO was the largest contributor to this shortfall, followed by K-Electric, LESCO, SEPCO, and HESCO. The failure to recover such a significant amount has significantly exacerbated the growing circular debt.
These low recovery rates have severely impacted revenues, resulting in a loss of over Rs. 380 billion to the national exchequer. If excludes KE, it will be Rs. 315 billion for XWDISCOs. Regarding fatal accidents in distribution companies/KE, the report indicated that in FY2023-24, safety in the power sector took a concerning turn, with 140 fatalities reported across distribution companies including 34 employees and 106 members of the public. K-Electric accounted for the largest share with 34 fatalities, followed by IESCO 26 and PESCO 20. On new connections, the report said that despite ample generation capacity, power demand remains low, partly due to delays in providing new connections to eligible consumers. The data for FY2023-24 shows mixed performance. PESCO, LESCO, HESCO, SEPCO, and K-Electric met the requirement, connecting over 95% of eligible consumers. However, GEPCO and QESCO fell just short, while IESCO, FESCO, and MEPCO failed to meet the target, leaving 13-14% of eligible consumers without timely connections. This delay not only causes financial losses but also leaves many consumers without power, despite available capacity. As of June 2024, approximately 137,862 eligible consumers had not received their connections on time, despite paying for services they did not receive.
Regarding loadshedding, the report said that NEPRA remains deeply concerned about the excessive and persistent loadshedding across Pakistan. Despite receiving adequate power allocations based on the Aggregate Technical & Commercial (AT&C) losses policy, DISCOs often draw less power than needed, worsening the loadshedding situation. On System Average Interruption Frequency Index (SAIFI) and System Average Interruption Duration Index (SAIDI), the report said that NEPRA emphasizes the importance of reliable power supply for economic growth and uses two key metrics SAIFI and SAIDI to assess distribution system reliability. Based on the provided data for FY 2023-24, most DISCOs fell short of NEPRA’s standards.
Regarding complaints, the report said that in FY2023-24, DISCOs reported a total of 3,403,622 complaints, spanning a range of issues. However, discrepancies in complaint volumes across DISCOs raise concerns. For example, SEPCO reported only 2,845 complaints, which could either indicate an exceptionally efficient system or suggest data inaccuracies. Meanwhile, K-Electric accounted for 35% of the total complaints, suggesting a more robust system for capturing consumer feedback.
In conclusion, the report said that the FY2023-24 Performance Evaluation Report highlights the persistent challenges in Pakistan’s power sector, including high transmission and distribution losses, poor billing and collection efforts, excessive loadshedding, and delays in providing new connections. Safety remains a major concern, with a troubling number of fatalities among both employees and the public. Addressing these issues requires significant structural reforms. Key solutions include the potential division of large DISCOs into smaller entities, privatization or public private partnerships, reducing union influence, discontinuing the AT&C losses policy, leveraging modern technology, and adopting a customer-centric approach. These reforms are essential for improving system efficiency and overall performance.
