Discos bleed Rs265 billion from T&D losses, Rs132 billion from recovery shortfalls: NEPRA

ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has published its State of Industry Report 2025 along with the Annual Report 2024–2025, fulfilling its statutory obligation to present a comprehensive account of the power sector’s performance and regulatory oversight to the Council of Common Interests (CCI) and the Federal Government.

Under the Regulation of Generation, Transmission and Distribution of Electric Power Act, 1997 (the NEPRA Act), the regulator is required to submit two key annual reports: one detailing the conduct of its affairs during the year, including anticipated developments for the following year, and the other assessing the overall state of electric power services across the country. In compliance with these provisions, NEPRA has finalized and issued both reports for onward submission to the constitutional and federal authorities.

As of June 30, 2025, circular debt stood at around Rs1.614 trillion, down from Rs2.393 trillion a year earlier. The regulator cautioned that the reduction of roughly Rs780 billion did not reflect a structural improvement, noting that similar declines in the past were also driven by temporary financial measures rather than lasting reforms.

During FY2024–25, Nepra estimated that inefficiencies at public-sector distribution companies contributed around Rs265 billion through excessive transmission and distribution losses and a further Rs132 billion due to recovery shortfalls. Despite these gaps, the overall circular debt declined after the federal government arranged commercial financing to retire liabilities of Power Holding (Private) Limited and clear arrears owed to independent power producers.

Pakistan’s public-sector power distribution companies failed to meet key operational and financial benchmarks in FY2024–25, as high transmission and distribution losses and weak bill recoveries continued to strain the electricity supply chain.

The report showed that average transmission and distribution losses across distribution companies stood at 17.55% during the year, significantly above the regulator’s allowed benchmark of 11.43%. The excess losses resulted in an unrecovered financial impact estimated at Rs265 billion.

Despite regulatory targets and repeated interventions, most utilities were unable to reduce losses. The report attributed the performance gap to operational inefficiencies, aging infrastructure and ineffective control over theft and technical losses.

Recovery performance also remained below prescribed levels. Overall bill recovery stood at 96.62% against the allowed 100%, leading to a recovery shortfall of around Rs132.46 billion during the fiscal year. Several distribution companies reported substantially weaker recovery ratios, with some falling below 40%.

The regulator highlighted structural weaknesses in billing accuracy, collection mechanisms and governance frameworks as key factors behind the persistent shortfalls, noting that these issues continue to undermine the financial sustainability of the power distribution segment.

The State of Industry Report 2025 provides a detailed assessment of the performance of Pakistan’s power sector, covering the generation, transmission and distribution segments. It comprehensively reviews the role and performance of all key players and stakeholders operating across the electricity value chain. A dedicated section of the report presents extensive statistical data, including operational records and other relevant information for the financial year 2024–25, offering a valuable reference for readers, analysts and decision-makers. The report also includes recommendations aimed at improving efficiency and performance within the power sector.

Meanwhile, the Annual Report 2024–2025 outlines NEPRA’s regulatory activities and the conduct of its affairs during the year, in line with the requirements of the NEPRA Act, and highlights expected developments in the coming period.

According to NEPRA, both reports have been simultaneously submitted to the Council of Common Interests and the Federal Government and have also been made publicly available by uploading them on the authority’s official website.