Power companies’ poor performance costs Rs660bn to exchequer
• Fail to meet targets for new connections
• Transmission, distribution losses mount despite loadshedding
ISLAMABAD: The performance of electricity supply companies declined in 2023-24, resulting in a loss of over Rs660 billion to the national exchequer.
This deterioration was attributed to increased inefficiencies, including high losses and low recovery rates. Additionally, most power plants in private and public sectors imposed an even greater, yet unquantifiable, burden on consumers and taxpayers.
In its annual performance reports of the power sector, the National Electric Power Regulatory Authority (Nepra), however, highlighted high standards and strong performance of the nuclear power plants. At the same time, the transmission system showed improvement but remained below expectations during 2023-24.
While none of the distribution companies, including K-Electric, could meet targets for transmission and distribution (T&D) loss reduction and recoveries, their loss-based loadshedding practices used illegally over a decade appeared to be unsuccessful, Nepra said, adding they also failed to meet their safety, security and reliability targets during the year and the number of casualties increased unfortunately.
“T&D losses remain a major challenge in Pakistan’s power sector… none of the distribution companies has achieved the required limits”, the regulator said, adding that these losses “led to an estimated Rs281bn drain on the national exchequer”.
This loss has been calculated, including KE; however, Discos’ contribution is around Rs276bn. PESCO, LESCO, QESCO, and SEPCO are the largest contributors to this financial shortfall, accounting for Rs96bn, Rs47.5bn, Rs37bn and Rs28.7bn.
Faisalabad, KE and Islamabad-based companies missed the target for T&D losses by 1.12pc, 1.41pc and 1.54pc respectively, while Peshawar, Sukkur, Quetta and Hyderabad-based companies missed their targets by 18.4pc, 18.2pc, 15.7pc and 9.6pc, respectively.
The regulator said these losses are a major contributor to circular debt, adding that Discos’ performance deteriorated in FY24, with T&D losses rising to 18.08pc, up from 16.38pc in FY23. “Despite Nepra setting a target of 12.15pc for T&D losses, the actual losses exceeded the target by a significant 5.93pc.
Billing and collection
“No Disco achieved the target of 100pc recovery in FY24”, noted the regulator, lamenting that maximising revenue collection was crucial for the financial health of Discos for reducing circular debt. Islamabad, Gujranwala, Faisalabad, Lahore and Multan (all Punjab-based) came close to recovery rates ranging from 96pc to 97pc, while Peshawar and K-Electric exceeded 90pc.
In contrast, Hyderabad maintained low recovery rates of 76.40pc showing minimal improvement while Quetta and Sukkur-based firms performed the worst, with a troubling recovery rate of just 65.41 and 31.79pc respectively, even lower than the previous year. “These low recovery rates have severely impacted revenues, resulting in a loss of over Rs380bn to the national exchequer”.
“The overall recovery rate of 92.18pc in FY24 is concerning, especially in the context of rising circular debt, high T&D losses, and the growing per-unit cost of electricity. Urgent corrective measures are needed to improve recovery rates and reduce the financial strain on the sector”, the regulator said.
All companies, including KE, failed to meet power interruption frequency and duration targets. While IESCO, FESCO, LESCO, and MEPCO showed some improvements, they remained close to the targets. In contrast, PESCO, GEPCO, QESCO, SEPCO, HESCO, and K-Electric significantly underperformed and failed to meet the set benchmarks. Additionally, all companies underperformed on interruption duration targets.
Despite surplus capacity, half of the power companies failed to meet targets for providing new connections to applicants. PESCO, LESCO, HESCO, SEPCO, and K-Electric met the requirement, connecting over 95pc of eligible consumers, while GEPCO and QESCO fell just short and IESCO, FESCO, and MEPCO failed to meet the target, leaving 13-14pc of eligible consumers without timely connections.
Saftey and high cost
Safety in the power sector took a concerning turn during the year, with 140 fatalities reported across distribution companies — 34 employees and 106 members of the public. K-Electric accounted for the largest share, followed by IESCO and PESCO.
K-Electric attributed many incidents to consumer negligence or accidents occurring on private property.
Published in Dawn, December 11th, 2024