By Muhammad Mudassar
ISLAMABAD, Mar. 2 (INP-WealthPK): Higher transmission and distribution (T&D) losses, low recoveries by power distribution companies (DICOs), and prodigious amount of payment to generation companies (GENCOs) are major causes of rise in circular debt. Circular debt is growing by average Rs38 billion per month in the first six months (July- December) of fiscal year 2021-22. Pakistan’s total circular debt reached Rs2.5 trillion by December 2021.
The losses are divided into two categories -- technical and non-technical. Loses in T&D cannot be eliminated, but it could be curtailed. The National Electric Power Regulatory Authority (NEPRA) sets target of T&D losses through respective tariff determination. According to State of Industry Report 2021 by NEPRA, Hyderabad Electric Supply Company (HESCO), Peshawar Electric Supply Company (PESCO) and Sukkur Electric Supply Company (SEPCO) have the highest T&D losses with 38.55%, 38.18% and 35.27%, respectively.
Transmission and Distribution Losses (T&D) 2021
| DISCO |
Losses (%) |
| PESCO |
38.18 |
| IESCO |
8.54 |
| GEPCO |
9.23 |
| FESCO |
9.28 |
| LESCO |
11.96 |
| MEPCO |
14.93 |
| QESCO |
27.9 |
| SEPCO |
35.27 |
| HESCO |
38.55 |
| TESCO |
9.58 |
Source: NEPRA 2021
Generation capacity in Pakistan was increased on a large scale under the China-Pakistan Economic Corridor (CPEC) but the T&D system is not upgraded. Recovery is one of the key elements that positively contributes to the electricity sector. It helps minimise the losses. According to former finance minister Miftah Ismail, 12% of electricity consumers in Pakistan are not paying bills. NEPRA reported above 100% recovery of IESCO, MEPCO, GEPCO and PESCO in FY 2020-21. With 39.8% recovery rate, Quetta Electric Supply Company (QESCO) has lowest recovery among all DISCOs.
| DISCOs |
Actual recovery (%) |
| PESCO |
100 |
| IESCO |
100 |
| GEPCO |
100 |
| FESCO |
97.3 |
| LESCO |
98.72 |
| MEPCO |
100 |
| QESCO |
39.8 |
| SEPCO |
64.48 |
| HESCO |
75.63 |
| TESCO |
83.27 |
Source: NEPRA 2021
Instead of investing in new electricity plants, the government must focus on improving the T&D of existing plants. DISCOs need to work on it by carrying out maintenance activities on regular basis. Efficient billing and 100% recovery must be ensured by DISCOs.
NEPRA must monitor actions that are assigned to different power sector entities. Competition in transmission sector helps improve the services. Automation in DISCOs helps with effective and timely planning, procurement, operation and maintenance, technical and financial audits, load planning, load analysis and disposal of complaints.
Privatisation is one of the affective ways to improve electricity sector of Pakistan. Privatisation of the DISCOs will help in boosting recoveries and reducing line losses. In a positive development, the government is working on Competitive Trading Bilateral Contracts Market (CTBCM). It will significantly enhance the performance of Pakistan’s electricity sector.
Electricity theft is another major issue. The government should take steps to prevent electricity theft.
Beyond these necessary steps to make the power sector more reliable, the government needs to swing its focus to clean and green sources of electricity. Pakistan has a tremendous potential for producing renewable energy. The government must offer incentives to attract domestic and foreign investors for the improvement of distribution and transmission of electricity.
