ISLAMABAD: In a significant development, Pakistani Prime Minister Shehbaz Sharif approved the transfer of 10 electric power distribution companies (DISCOs) to the provinces and, to that end, established a 13-member committee under the leadership of Federal Minister for Defense Khawaja Asif, which will draught an implementation plan within the next 10 days.
According to a senior official at Power Division, the five DISCOs include GEPCO (Gujranwala Electric Power Company), MEPCO (Multan Electric Power Company), LESCO (Lahore Electric Supply Company), FESCO (Faisalabad Electric Supply Company), and IESCO (Islamabad Electric Supply Company) will be handed over to Punjab, HESCO (Hyderabad Electric Supply Company), and SEPCO (Sukkur Electric Supply Company) to Sindh, QUESCO (Quetta Electric Supply Company) to Balochistan, PESCO (Peshawar Electric Supply Company) and TESCO (Tribal Electric Supply Company) to KPK.
In 2022–2023, all DISCOs braved annual losses of Rs300 billion that the federal government could no longer bear.
The 13-member committee will also work closely to seek changes to other regulatory terms and conditions, such as distribution licenses, which will be controlled by provincial governments.
The transmission and generation of electricity will still be under federal authority, though. Following their takeover of DISCOs, provincial governments will determine whether to subsidize the cost of power for their customers.
Also, provinces would have the authority to decide how to eliminate theft and load-shedding schedules.
Due mostly to electricity theft and a low recovery rate for unpaid bills, the circular debt in the power sector has climbed to Rs2.6 trillion. Circular debt is caused by a variety of circumstances as well.
According to the most recent Nepra 2021–22 review report, SEPCO’s transmission and distribution losses are on the higher side at 36%, while HESCO’s are at 25.40%.
Moreover, PESCO has the greatest losses of any DISCO, at 37.23%. Yet, with losses of 8.18 percent, IESCO is the best and most effective DISCO. However, the losses for GEPCO, LESCO, MEPCO, and K-Electric all remained unchanged at 9.07 percent, 11.50 percent, 14.70 percent, and 15.30 percent, respectively.
The current overall loss percentage is 17%.
A total of Rs122.6 billion will be lost by the national exchequer in FY 2021–22 as a result of transmission and distribution losses.
A total loss of almost Rs170 billion must be borne by the national exchequer for FY 2021–2022, as only about Rs2,517 billion of the estimated Rs2,686 billion in bills were paid.
QESCO is the largest contributor in this regard, followed by SEPCO and HESCO. It is clear that Pakistan’s circular debt has grown mostly as a result of the insufficient recovery of such a substantial sum.