ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has raised concerns over the declining performance of power Distribution Companies (Discos), which has led to a significant increase in circular debt. According to Nepra, the Discos’ failure to meet electricity sales targets and manage losses contributed an estimated Rs 596 billion to the circular debt for the fiscal year 2023-24.
In a report shared with Nepra by the Central Power Purchasing Agency-G (CPPA-G) on July 30, 2024, it was revealed that Discos had reduced their electricity purchases by 1% compared to the previous year, while their losses rose to 18.31% from 16.84%. This breach of the allowed target for transmission and distribution (T&D) losses contributed approximately Rs 276 billion to the circular debt.
Despite a government allocation of Rs 406 billion to curb the growth of circular debt and an investment of Rs 163.1 billion aimed at improving Discos’ network, inefficiencies and under-recoveries have continued to plague the sector. Nepra highlighted that although recovery rates remained steady at 92%, the financial impact of unrecovered amounts escalated to Rs 315 billion, exacerbating the debt crisis.
Further analysis revealed that several Discos, including Lahore Electricity Supply Company (Lesco), Peshawar Electricity Supply Company (Pesco), and Multan Electric Supply Company (Mepco), reported higher-than-expected losses and receivables, significantly contributing to the overall debt. This ongoing inefficiency highlights the urgent need for reforms in Pakistan’s power distribution sector.
