Discos add Rs596bn to circular debt

ISLAMABAD: Expressing concern at the performance of power Distribution Companies (Discos), National Electric Power Regulatory Authority (Nepra) noted a reduction in sale of electricity and increase in losses and inefficiencies to the tune of Rs 596 billion, well informed sources in CPPA-G told Business Recorder.

The power sector regulator conveyed its views to Central Power Purchasing Agency-G, the System Operator, in an email dated July 30, 2024 wherein a report on circular debt for June 2024 was shared with Nepra with a request to review it.

According to sources, Nepra, in its comments, observed that Discos’ electricity purchases for FY 2023-24 were reduced to 11,142 GWHs; i.e., 1 per cent as compared to 16,696 GWHs for FY 2022-23. Discos losses during FY 2023-24 increased to 18.31% as compared to 16.84% during FY 2022-23; i.e., an increase of 1.47 per cent.

Govt budgets Rs406bn to stem circular debt growth

The regulator further stated that the allowed average target of T&D losses for the FY 2023-24 was 11.77 per cent. Thus Discos have breached the target by 6.54 per cent. “This breach of target contributed around Rs.276 billion to circular debt for the FY 2023-24. This is despite the fact that Discos have been allowed an investment amount of Rs.163.1 billion for the FY 2023-24 to improve their network,” the sources quoted Nepra as saying in its comments.

On the point of recovery, Nepra maintained that although the recovery percentage has remained the same; i.e., 92 per cent for the FY 2023-24 as compared to FY 2022-23; however, the financial impact of un-recovered amount has increased to Rs.315 billion in FY 2023-24 as compared to Rs.236 for the FY 2022-23.

Nepra further stated that the increase in circular debt for FY 2023-24, remained around Rs.83 billion, primarily due to the fact that stock payments of Rs.374 billion were paid through fiscal space.

However, inefficiency of Discos in terms of excess T&D losses and under recovery resulted in contribution of Rs.596 billion to the circular debt.

Sharing details of the performance of some Discos, sources said that progressive T&D losses of Lahore Electricity Supply Company (Lesco) in June 2024 were 15.80 per cent which are 5.79 per cent higher than Nepra’s target for 2023-24. The progressive computed recovery (without subsidy) for June 2024 was 98.87 per cent which is 1.13 per cent less than Nepra target of 2023-24.

The company’s receivables ending June 2024 rose to the level of 224.649 billion from Rs 213.235 billion as on June 30, 2023, showing an increase of Rs 11.413 billion. Lesco also charged Rs 13.343 billion through detection bills during FY 2023-24 (as per PITC dashboard) with recovery of Rs 5.018 billion, thereby recovery percentage was 37.6 per cent which is on the very low side. It also shows that line losses are managed through this activity, violating detection policy, and increasing the receivables.

T&D losses of Peshawar Electricity Supply Company (Pesco) are 38.05 per cent, which increased by 18.33 per cent from Nepra’s target for 2023-24 whereas recovery was 92.22 per cent - 7.78 per cent less than Nepra target. Receivables ending June 2024 rose to the level of Rs 246.104 billion from Rs 215.063 billion as on June 30, 2024, showing an increase of Rs 31.044 billion.

Pesco charged Rs 5.825 billion as detection bills in FY 2023-24, with recovery of just Rs 2.011 billion; thereby, recovery percentage was only 34.5 per cent which is on the very low side. It also shows that the line losses are managed through this activity, violating detection policy, increasing the receivables.

T&D losses of Multan Electric Supply Company (Mepco) are 15.18 per cent which increased by 3.35 per cent from Nepra’s target for FY 2023-24.

The Company’s recovery reduced by 1.38 per cent whereas receivables have risen to the level of Rs 128.871 billion from Rs 109.599 billion as on June 30, 2024, showing an increase of Rs 19.272 billion.

The Disco also charged Rs 7.299 billion through detection bills during FY 2023-24, with recovery of Rs 5.547 billion, which shows that line losses are managed through this activity, violating detection policy, increasing the receivables.

T&D losses of Islamabad Electric Supply Company (Iesco) are 8.76 per cent which increased by 1.45 from Nepra target 2023-24 whereas progressive computed recovery (without subsidy) for June 2024 is 98.21 per cent which is 1.79 per cent less than Nepra target 2023-24. Receivables ending June 2024 have risen to the level of Rs 89.447 billion as on June 30, 2024 showing an increase of Rs 15.490 billion.

The Disco also charged Rs 1.586 billion through detection bills during FY 2023-24 with recovery o Rs 1.172 billion, thereby recovery percentage was only 73.9 per cent which is on very low side. It shows that the line losses are managed through this activity, violating the detection policy, increasing the receivables.

The sources said, losses of Faisalabad Electric Supply Company (Fesco) have increased by 1.08 per cent from Nepra 2023-24 target, receivables increased by Rs 14.831 billion whereas Gujranwala Electric Supply Company’s (Gepco) T&D losses increased by 2.48 per cent, computed recovery reduced by 0.93 per cent and receivables increased by Rs 17.466 billion.

Copyright Business Recorder, 2024