LAHORE: Recovery losses of distribution companies (DISCOs) in Pakistan have risen to 200 percent in 2018-19 comparing with 2017-18, contributing heavily to the country's circular debt of Rs2.2 trillion.
It may be noted that the national exchequer had suffered a total loss of Rs171.5 billion in fiscal year 2018-19 due to the failure of the distribution companies (DISCOs) to achieve recover targets 100 percent which is very alarming and one of the main reason of continuous growing circular debt in Pakistan, said power division sources.
This is a huge loss to national exchequer which is 200% more than the last fiscal year i.e. 2017-18. It is relevant to state that the low recovery ratios have effectively crumbled the revenues beyond acceptable levels and no significant improvement has been observed despite continuous regulatory directions to the poor performing DISCOs.
The sources pointed out that the Power Division has failed to improve the recovery efforts of DISCOs, despite a direct intervention from Federal Minister Omar Ayub as well as former Federal Secretary Power, Irfan Ali. Managements of DISCOs have introduced a number of carrot and stick measures to expedite recovery targets, but all in vein, as the line staff is not out of control, they added.
According to the sources, line staff is not only involved in corrupt practices but also exploiting the situation by misusing the measures introduced to improve recoveries. They said the consumers are turning up at the complaint cells, complaining against the line staff for charging inflated bills on account of incorrect readings. In some cases, no picture of meters is pasted on the monthly bills, which is essential to win the confidence of consumers. They said lower staff at the revenue offices was hand in glove with the field staff in fleecing consumers.
Sources said it is becoming difficult for the government to maintain financial health of DISCOs due to their poor collection.
It may be noted that reduction in the burden of circular debt has become a major issue for the Power Division, which is only possible through proving the recoveries of DISCOs. According to sources, DISCOs like QESCO, SEPCO and HESCO, PESCO and IESCO have failed to achieve full recoveries in FY 2018-19.
As a matter of fact, none of the DISCO has achieved the milestone of 100% recovery; however, MEPCO is very close to it followed by GEPCO and LESCO by showing their recoveries as 99.8%, 98% and 97.67%. It is noted with concern that QESCO has performed abnormally low and has achieved only 24.4% recovery. SEPCO and HESCO also performed poorly and need to improve their recoveries. Overall weighted average of 89.26% recovery has been achieved by DISCOs against 100%.
QESCO's share seems very high i.e. more than Rs57 billion as it has performed very badly in FY 2018-19. It is surprisingly noted that after QESCO, IESCO is the second largest contributor in this huge revenue loss i.e. more than Rs20 billion. Further, it is observed that FESCO and K-Electric have also lost significant revenues i.e. more than Rs15 billion.
Copyright Business Recorder, 2020
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