ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has directed NTDC and KE to implement real-time transformer load monitoring systems to better manage loads and prevent outages.
In its performance evaluation report of transmission companies -2023-24, Nepra has stated that NTDC’s transmission system is facing long-standing and persistent constraints, many of which have been unresolved for years.
These limitations are significantly impacting the power sector. The most pressing issue is the system’s inability to efficiently evacuate electricity from cost effective power plants, resulting in their underutilization. Consequently, more expensive power plants are being operated, which not only strains the financial health of the power sector but also undermines overall system reliability.
NTDC admits delay in implementing power plan
Nepra has been engaged with NTDC for several years to address these challenges and to expedite the resolution of these issues, quarterly meetings are held to track the progress of NTDC’s projects, particularly those aimed at removing constraints that affect the Economic Merit Order (EMO).
Pakistan’s cost-effective base-load power plants are primarily located in the south, utilizing indigenous resources like Thar coal, local gas, and wind power, which help conserve foreign exchange. However, the NTDC transmission system is unable to efficiently transmit electricity from these southern hubs to northern load centers, burdening consumers with higher costs.
This transmission bottleneck not only raises electricity prices but also stifles economic growth. It increases reliance on more expensive northern plants, driving up tariffs and worsening the circular debt crisis in the power sector.
In FY 2023-24, there were 27 tower collapse incidents, down from 46 in FY 2022-23. The majority of these incidents occurred in the southern regions, including Hyderabad and Quetta circles, with only one reported in the northern region (Islamabad). The primary causes of these collapses were severe weather events—such as windstorms and thunderstorms—along with sabotage and theft. These incidents disrupt the steady and cost-effective supply of electricity.
NEPRA highlighted several critical issues regarding NTDC’s transmission network, including the availability of Event & Fault Recorders, time synchronization of protection relays, and the commissioning of numerical relays. Additionally, concerns were raised about the construction of firewalls around sensitive equipment, mitigation plans for power transformer overloading, and the installation of thermo-vision cameras across key transmission hubs (Islamabad, Lahore, Multan, and Hyderabad).
The frequent reliance on interim arrangements, such as power evacuation from K2/K3 and Nuclear Power Plants (NPPs), SukkiKinari, and others, highlight NTDC’s challenges in meeting deadlines for critical transmission infrastructure. While these temporary measures help mitigate immediate power shortages, they underscore the urgent need to complete permanent systems. Delays in finalizing grid upgrades risk compromising system reliability, increasing transmission losses, and raising operational costs, particularly during peak demand periods.
It was observed that the absence of a standardized policy or SOP for asset compensation, as well as for the formal handing over and taking over of assets, was contributing to various operational challenges. In response, Nepra directed NTDC to develop and implement the necessary policies and SOPs. Accordingly, during FY 2023-24, NTDC submitted two policies, both approved by its Board of Directors: the “Handing Over/Taking Over of NTDC Assets” policy and the “Compensation Policy for Right of Way and Land Acquisition.”
It has been observed that several NTDC infrastructure projects are experiencing significant delays across both northern and southern regions, with expected completion dates now extending beyond their original contractual timelines. Key projects, including new developments and augmentation works at 500kV and 220kV grid stations, are facing delays, with revised completion dates now set for late 2024 and 2025, instead of the originally planned FY 2023-24. The details are provided in the relevant sections.
NEPRA has recommended that NTDC must increase grid transformation capacity by installing additional transformers and reactive power compensation equipment at critical grid stations, including 500 kV Jamshoro, 500 kV Dadu, 500 kV Rawat, 220 kV Sarfaraz Nagar, 500 kV Yousafwala, 500 kV Sheikhupura, 220 kV Quetta Industrial, and 500 kV Sheikh Mohammadi Peshawar.
NTDC & KE should adopt higher-capacity, modern switchgear to improve load management and prevent overloading during peak demand. Grid reinforcement plans must address both short-term (transformer upgrades) and long-term (new substations and transmission lines) needs.
Real-Time Transformer Load Monitoring: NTDC & KE should implement real-time transformer load monitoring systems to better manage loads and prevent outages.
In another report on performance of DISCOs during 2023-24, NEPRA has calculated accumulated losses of Rs over 650 billion during the financial year.
According to the Regulator, T&D losses remain a major challenge in Pakistan’s power sector. Despite Nepra’s consistent guidance and directives for DISCOs to reduce these losses and meet specified targets, none of the distribution companies have achieved the required limits. As a result, these losses have led to an estimated Rs. 281 billion drain on the national exchequer. This loss has been calculated including KE, however, the contribution of DISCOs is around Rs. 276 Billion. PESCO, LESCO, QESCO, and SEPCO are the largest contributors to this financial shortfall, accounting for Rs. 96 billion, Rs. 47.5 billion, Rs. 37 billion, and Rs. 28.7 billion, respectively.
Maximizing revenue collection is crucial for the financial health of DISCOs and for reducing circular debt. However, no DISCO achieved the target of 100% recovery in FY 2023-24. IESCO, GEPCO, FESCO, LESCO and MEPCO came closest, with recovery rates ranging from 96% to 97%, while PESCO and K-Electric exceeded 90%. In contrast, HESCO has maintained low recovery rates of 76.40% showing minimal improvement. QESCO and SEPCO performed the worst, with a troubling recovery rate of just 65.41 and 31.79% respectively, even lower than the previous year. These low recovery rates have severely impacted revenues, resulting in a loss of over Rs. 380 billion to the national exchequer. If KE is excluded it will be Rs. 315 Billion for Discos. The financial impact of failing to meet T&D loss targets amounted to Rs. 281.632 Billion for the reported period.
The data for FY 2023-24 shows mixed performance. PESCO, LESCO, HESCO, SEPCO, and K-Electric met the requirement, connecting over 95% of eligible consumers. However, GEPCO and QESCO fell just short, while IESCO, FESCO, and MEPCO failed to meet the target, leaving 13-14% of eligible consumers without timely connections.
NEPRA sets tariffs based on 100% receivables and does not tolerate inefficiencies. The overall recovery rate of 92.18% in FY 2023-24 is concerning, especially in the context of rising circular debt, high T&D losses, and the growing per-unit cost of electricity. Urgent corrective measures are needed to improve recovery rates and reduce the financial strain on the sector.
In FY 2023-24, DISCOs collected Rs. 4,486.557 billion against a billed amount of Rs. 4,867.359 billion, resulting in a revenue shortfall of approximately Rs. 380.802 billion about 150% higher than the previous year’s loss of Rs. 236 billion. The share of all DISCO’s revenue loss is around Rs. 315 billion out of the total loss of Rs. 380 billion. This loss will be absorbed by the National Exchequer or the consumers in term of surcharges.
The failure of DISCOs, particularly PESCO and MEPCO, to meet industrial demand despite the sector’s reliability and timely payments points to a critical shortfall in efforts to enhance profitability. While LESCO met the requirement of providing connections to over 95% of eligible consumers, it still has a significant backlog of pending connections, second only to MEPCO.
In contrast, K-Electric has made notable progress, significantly reducing AT&C-based load shedding in its territory by approximately 75%. The company’s investment plan for FY 2024-2030 aims to eliminate load shedding from 95% of its feeders. Nepra has directed K-Electric to ensure that any necessary load shedding is carried out at the PMT level, in compliance with PSDR 2005.
Copyright Business Recorder, 2024
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