In a major development, Prime Minister of Pakistan Shehbaz Sharif has allowed the handing over of 10 electric power distribution companies (DISCOs) to the provinces and to this effect constituted a 13-member committee headed by Federal Minister for Defence Khawaja Asif that will prepare a draft for implementation in next 10 days.
According to a senior official at Power Division, the five DISCOs include GEPCO (Gujranwala Electric Power Company), MEPCO (Multan Electric Power Company), LESCO (Lahore Electric Supply Company), FESCO (Faisalabad Electric Supply Company), and IESCO (Islamabad Electric Supply Company) will be handed over to Punjab, HESCO (Hyderabad Electric Supply Company), and SEPCO (Sukkur Electric Supply Company) to Sindh, QUESCO (Quetta Electric Supply Company) to Balochistan, PESCO (Peshawar Electric Supply Company) and TESCO (Tribal Electric Supply Company) to KPK.
All DISCOs braved Rs300 billion in losses in 2022-23 annually which the federal government can no longer absorb. The 13-member committee would also work in detail for seeking amendments in distribution licenses which will be owned by provincial governments and other regulatory terms and conditions.
However, the federal government will continue to have control of electricity generation and transmission systems. Provincial governments will decide after getting control of DISCOs about the subsidy in electricity tariff for their consumers. They (provinces) would also be given the power to take decisions on steps to reduce theft and load-shedding schedules.
The circular debt in the power sector has increased to Rs2.6 trillion mainly because of electricity theft and low recovery of bills. There are also many factors that contribute to circular debt. As per the latest evaluation report of Nepra 2021-22, SEPCO's transmission and distribution losses stand on the higher side at 36 percent and HESCO's at 25.40 percent.
In addition, PESCO's losses stand at 37.23 percent - the highest among all DISCOs. However, IESCO is the best and most efficient among the DISCOs as its losses stand at 8.18 percent. However, GEPCO's loss remained at 9.07 percent, LESCO's at 11.50 percent, MEPCO's at 14.70 percent, and K-Electric's at 15.30 percent. Right now the total losses stand at 17 percent.
Overall, the financial loss born by the national exchequer in FY 2021-22, in the wake of transmission and distribution losses, stands at around Rs122.6 billion. In FY 2021-22, around Rs2,517 billion were collected against the billed amount of Rs2,686 billion, showing that a total loss of around Rs170 billion has to be suffered by the national exchequer for FY 2021-22.
In this regard, the highest contributor is QESCO followed by SEPCO and HESCO. It is evident that less recovery of such a huge amount has mainly contributed to increasing the circular debt of Pakistan.