Losses incurred by the power distribution companies (Discos) due to their inefficient transmission and distribution system (T&D) increased by 18.31% in FY24, up from 16.84% in the previous fiscal year, exceeding the allowed average target of 11.77% by 6.54%. This breach contributed approximately Rs276 billion to the circular debt.
The National Electric Power Regulatory Authority (NEPRA) has expressed serious concerns over the performance of Discos, noting an increase in inefficiencies and losses amounting to Rs596 billion for the fiscal year 2023-24.
NEPRA’s concerns were communicated to the Central Power Purchasing Agency-G (CPPA-G) after reviewing the circular debt report for June 2024. The power regulator observed a decline in electricity purchases by Discos, with a reduction to 11,142 GWh in FY24 compared to 16,696 GWh in FY23, representing a 1% decrease.
Despite maintaining a recovery rate of 92%, the financial impact of uncollected amounts grew to Rs315 billion in FY24, up from Rs236 billion in FY23.
NEPRA attributed an additional Rs83 billion increase in circular debt to the inefficiencies of Discos, which have exacerbated the overall debt situation.
The report also highlighted the performance of specific Discos, including Lahore Electric Supply Company (Lesco), Peshawar Electric Supply Company (Pesco), Multan Electric Supply Company (Mepco), and Islamabad Electric Supply Company (Iesco), all of which showed increases in T&D losses and receivables, further contributing to the growing financial burden on the power sector.
The report underscores the need for urgent reforms to address the inefficiencies within Discos and to prevent further escalation of circular debt.
