Inefficiencies in power distribution companies (Discos) are contributing over Rs600 billion annually to the circular debt, which has now ballooned to Rs2.467 trillion. The latest data reveals the government’s inability to curb losses arising from low recovery rates and electricity theft.
Despite claims of a 92.44% recovery rate, Discos adds Rs50 billion monthly to the circular debt.
Outstanding dues from public and private sector consumers have risen sharply, increasing by 69.64% to Rs2.017 trillion in FY2025 compared to Rs1.189 trillion in 2021. Compared to last year, receivables have grown by 16.79%, reaching Rs1.727 trillion, further straining the system.
Running defaulters, including influential political and industrial figures, owe Rs1.094 trillion as of FY2024, an increase of Rs194 billion from the Rs900.82 billion owed in FY2023.
This growing default rate continues to exert immense pressure on the power sector, highlighting ineffective recovery mechanisms. An official involved in Discos’ operations disclosed that 10-15% of the recovery shown annually is achieved through overbilling, raising doubts about the claimed improvement in recovery rates.
Data from Nepra reveals that consumers of profit-making Discos were charged Rs125.78 billion in the current fiscal year as cross-subsidies for loss-making companies. For instance, consumers of Iesco paid Rs65.88 billion, those of Lesco paid Rs39.53 billion, Gepco consumers contributed Rs14.17 billion, and Mepco consumers paid Rs6.19 billion. Despite this, no significant steps have been taken to resolve inefficiencies in loss-making Discos.
In FY2023-24, excessive transmission and distribution (T&D) losses across Discos caused an additional financial burden of Rs276.35 billion, while shortfalls in recovery of billed amounts added Rs314.506 billion to the circular debt. Consumers continue to bear the cost of these inefficiencies through higher tariffs and surcharges, while reforms remain absent.
