• Cumulative financial bleeding hits Rs1tr as T&D losses rampant
• 160 fatalities were reported in 2022-23 led by 33 in KE system
• New connections denied

ISLAMABAD: All the power distribution companies (Discos) including K-Electric showed poor performance during 2022-23 against set targets, resulting in cumulative financial losses of about Rs1 trillion a year and adding more than Rs350 billion to the circular debt.

Based on performance evaluation reports (PERs) of the Discos including KE, the National Electric Power Regulatory Authority (Nepra) on Monday called for drastic structural changes in the power sector on an urgent basis to protect the industry from closure and consumers from affordable charges. “It is evident that the performance of Discos throughout this period remained subpar, and the expected power sector reforms were not achieved”, said the regulator in its PER 2022-23.

The performance reviews were based on data provided by the Discos themselves in the areas of technical losses, recoveries, load-shedding, safety measures, installation of new connections, complaint redressals and other technical standards like frequency and load fluctuations etc. None of the companies could achieve the parameters relating to the frequency and duration of power failures and complaint resolutions. In terms of safety, more than 160 fatalities were reported in 2022-23 led by 33 in the KE system. Of the total, fatalities included 52 employees and 109 other citizens.

“Given this ongoing poor performance, it is apparent that, under the existing circumstances, the current Disco setup is unlikely to be able to deliver the desired results”, concluded the regulator while noting that in light of these challenges, significant structural changes on a large scale were needed.

These changes could include the division of large Discos into smaller units and entities, the provincialisation of Discos, privatisation or corporatisation of Discos on public-private partnership mode, reduction in the influence of unions within the power sector, discontinuation of AT&C (aggregate technical and commercial) losses policy by using modern technology, outsourcing of high loss feeders, demand side management, and customer-oriented business approach.

There were some good performances here and there in some companies as well against evaluated targets but none of the Discos including KE could get close to all the targets. On average, the regulator noted that actual average transmission and distribution (T&D) losses across the power sector in 2022-23 stood at 16.38pc. Out of 16.4pc actual losses, 12.21pc were billed to the consumers and the remaining 4.2pc went to the circular debt. Another 13.74pc loss accrued on account of lower recoveries against billing. The direct combined financial loss of 30.12pc alone is estimated to have gone beyond Rs900bn.

“Unfortunately, the majority of Discos” could not meet targets in T&D losses, except those in Faisalabad (Fesco), Gujranwala (Gepco), and KE who have managed to keep their losses below the levels or equal to target. However, others exceeded these limits, which “contributed to a substantial loss of approximately Rs166bn to the national exchequer”.

Notably, those in Peshawar (Pesco), Hyderabad (Hesco), Sukkur (Sepco) and Quetta (Qesco) exhibited below-par performance. This was despite heavy investments allowed to address system constraints, reduce feeder lengths, automated metering etc. “It is disappointing that many Discos have been reluctant to undertake such projects…essential for reducing T&D losses and ensuring the efficiency of the power distribution system”.

Worst still, it was observed that the overall recovery went down in 2022-23; it remained 86.26pc as compared to 90.51pc during 2021-22, i.e., almost 4pc less than the previous financial year, the regulator said.

New connections

The regulator said it was “alarming that power demand is not being generated despite the availability of ample generation in the country”. Non-provision of new connections to the eligible consumers within the prescribed time frame was one of the factors contributing to this less power demand.

About 279,000 connections were not given to the eligible consumers even though they made payments due to which more than 1,100MW demand/load could not be served, which is a serious matter of concern as the ample generation capacity is available“, the regulator said.

The standards and targets required that more than 95pc of the applied connections must be given within the time frame but the performance of Gepco, Fesco and Qesco remained poor as they failed to meet targets by a “huge margin”.

Loadshedding

The regulator said it was an undeniable fact that Discos were deliberately drawing less power than their demand, despite being provided with an adequate quota on account of load shedding based on Aggregate Technical & Commercial (AT&C) losses policy, “which is in direct contradiction with the Nepra Act” and other laws and rules and the regulator has started legal proceedings against Pesco, Qesco, Hesco, Sepco and KE for this “blatant violation of Nepra laws”.

This violation has gone on in almost all Discos since 2013 and improvement in AT&C could not be achieved between 2018-2023. “The good-paying consumers connected on the same feeder also badly suffer and it is highly unjustifiable that they face collective punishment due to some non-paying consumers”.

Published in Dawn, February 27th, 2024