Recovery targets of Discos: inefficient CEOs may be removed

Ministry of Water and Power has decided to remove all those Chief Executives Officers (CEOs) of Distribution Companies (Discos) who fail to achieve recovery targets, well informed sources told Business Recorder. Ministry of Water and Power claims that Discos's receivables have touched Rs 383 billion more against both public and private sector clients, which is, however, being challenged by the Finance Ministry.
The Federal Cabinet, in its recent meeting directed the concerned Ministries that the figures be authenticated by both the Ministries to build a consensus on data. "Yes, we have given one month's time to the CEOs to achieve recovery targets by July 31, 2012 or be ready to go home unceremoniously," the sources added.
The sources said Secretary Water and Power, Zafar Mahmood, who took charge of the Ministry at a challenging time, has also expressed his annoyance over unsatisfactory performance of Discos' CEOs. The Secretary Water and Power issued a warning to Discos' CEOs after the Federal Cabinet assigned responsibility to him that incompetent heads of Discos should be identified and considered for removal.
When contacted, Secretary Water and Power, said the Ministry had been writing such letters to Discos every month directing them to expedite recovery campaign. However, he maintained that after recovery figures of July, the government would launch a recovery drive throughout the country.
Recently, Imtiaz Kazi, predecessor of Zafar Mahmood, told Business Recorder that Discos' budgets have been linked with the distribution margin, ie percentage of recovery, but this action was not effective. "Ministries' instructions are not being followed by Discos; these are merely shelved," the sources added. Pepco have been attending Discos meetings wherein clear targets of recoveries were given to each Disco after the consent of CEOs.
Ministry routinely sends letters to all Discos identifying their targets and requesting them to take stern measures to meet targets as agreed with the CEO of each Disco and by the month's end the entire process is rendered inane. A letter written by the Secretary Water and Power advises all Discos that they will be allowed to retain the distribution margin proportionate to their recovery and advised CFO Pepco to ensure compliance, but the exercise remained futile.
On the other hand, Discos argue that they are making all-out efforts to achieve recovery targets but political influence and verbal instructions from the Federal government and Pepco hinder all their efforts. Power sector is facing a severe financial crunch due to low recoveries, T&D losses beyond Nepra targets and other inefficiencies within the distribution system. The size of circular debt in power sector has risen to a mammoth Rs 477 billion.