The power distribution companies will come under the scanner as the Prime Minister Nawaz Sharif has instructed the relevant authorities to conduct a probe for the unsubstantiated data of improvement in line losses and recovery of electricity bills. This move comes amidst a major increase in power outages and due to rising circular debt, which has greatly crippled the power sector.
In a high cabinet level meeting that took place on April 10th, the secretary to the Prime Minister raised doubts over the statistics provided in regards to bill recoveries and line losses. He recommended that a third party audit should be conducted for the authentication of the data provided for line losses and bill losses by the distribution companies. He also shared that the bill recoveries in years gone by had been in the range of 88-90pc and line losses were recorded to be around 19pc.The years 2015 and 2016 had seen a considerable improvement in terms of recoveries with the figure rising to 93pc and line losses declining to around 16.30pc.This was largely credited to the fall in international crude prices which restricted the rise in circular debt, which otherwise would have swelled to Rs684b according to the secretary.
The secretary went on to accuse the National Electric Power Regulator Authority (Nepra) of the surge in circular debt. He stated that due to the difference between Nepra’s presumption of 100pc bill recoveries and average 15.3pc line losses and actual recoveries and losses, the circular debt had risen from Rs320b in October 2014 to Rs374b in December 2016, he said. The liquidity crisis in the energy chain was largely blamed on the Ministry of Finance and he said they hadn’t increased pressure on inefficient power companies that were unable to reduce power theft.
The secretary did not divulge about how much money was earned by implementing tariff rationalisation and financial cost surcharges on power consumers. The money being generated through these surcharges could be amounting to around Rs200b according to some officials. Hence as a result of these surcharges, the distribution companies had been able to register high recovery figures.