Discos’ underperformance adds Rs596 billion to circular debt

WEB DESK: The National Electric Power Regulatory Authority (Nepra) has expressed serious concerns over the performance of power Distribution Companies (Discos), highlighting a significant increase in inefficiencies and financial losses amounting to Rs596 billion.

According to Business Recorder, on 30 July 2024, Nepra sent an email to the Central Power Purchasing Agency-G (CPPA-G) to discuss a report about the growing debt in the power sector.

The report showed that the Discos are not doing well, with a drop in electricity sales and an increase in losses.

Nepra found that Discos bought less electricity in the fiscal year 2023-24—down to 11,142 GWHs from 16,696 GWHs the previous year. They also reported higher losses, with a rate of 18.31 per cent compared to 16.84 per cent in the earlier year. This means their losses increased by 1.47 per cent.

The target for how much electricity Discos should lose during transmission and distribution was set at 11.77 per cent for FY 2023-24.

Discos went over this target by 6.54 per cent, which added about Rs276 billion to the debt. This happened even though they had Rs163.1 billion for improving their systems.

Nepra also mentioned that while the recovery rate from electricity sales stayed the same at 92 per cent, the total amount of unpaid bills increased to Rs315 billion, up from Rs236 billion the previous year.

The circular debt grew by Rs83 billion in FY 2023-24, partly because of Rs374 billion in payments made from the government’s budget.

The extra losses and unpaid bills from Discos are making the debt problem worse, totaling Rs596 billion.

Looking at specific Discos, the Lahore Electricity Supply Company (Lesco) reported higher losses in June 2024—15.80 per cent, which is much more than the target of 10.01 per cent. Also, Lesco’s recovery rate was 98.87 per cent, which is 1.13 per cent below the target.

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