‘Increase revenue-reduce loadshedding’: PESCO, KPK govt engage in contract talks

ISLAMABAD: The Peshawar Electric Supply Company (PESCO) and the Khyber Pakhtunkhwa (KPK) government are in discussions about a contract to “increase revenue-reduce loadshedding”.

The proposed contract focuses on improving electricity supply to feeders that are currently suffering from over 20% losses, with an emphasis on enhancing recovery and reducing losses, sources informed Business Recorder.

Initial talks have taken place between KPK Chief Minister Ali Amin Gandapur, PESCO Board Chairman Himayatullah Khan, former NEPRA (KPK) member, and former Energy Advisor to the KPK Government. PESCO faces annual losses of approximately Rs 130 billion, which are contributing to the broader power sector circular debt.

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In a letter to the Chief Minister, Himayatullah Khan referenced a meeting held on February 17, 2025, at the Chief Minister’s House.

During the meeting, the Chief Minister acknowledged the need to reduce load shedding in KPK, combat electricity theft, and improve recovery rates. Khan stated that following the Chief Minister’s directives, he and senior PESCO officials had analyzed all aspects of the issue and are now ready to present a viable proposal that balances the needs of both parties.

A draft contract has been shared with the Chief Minister, which, if approved, will be executed immediately between the KPK government and PESCO.

The contract addresses the Chief Minister’s concerns regarding load shedding by committing PESCO to minimize it. In return, the KPK government will be required to engage in an anti-theft and recovery campaign while ensuring compensation for PESCO’s financial losses due to supplying additional electricity to selected feeders with high Aggregate Technical and Commercial (AT&C) losses.

Khan emphasized, “I trust that you (the CM) will agree that securing PESCO’s finances is essential for any sustainable solution to load shedding. The proposed contract represents a balance between the need to reduce load shedding, combat electricity theft, and boost recovery rates.”

The PESCO Board Chairman argued for that if the Chief Minister agrees to the proposal, necessary steps will be taken to implement the scheme and execute the contract promptly.

The main objective of the contract is to launch an anti-theft and recovery campaign, aimed at reducing AT&C losses, minimizing load shedding, and improving customer care services. The campaign will focus on selected areas in Khyber Pakhtunkhwa as a pilot project, in collaboration with the KPK government, which will take tangible steps to reduce AT&C losses and enhance bill recovery.

The selected feeders for the pilot project are listed in the contract’s schedule. The campaign will run from March to April 2025, and if successful, it could be expanded to other feeders. However, if the campaign yields unsatisfactory results, the contract will be terminated, and any additional financial losses incurred by PESCO due to reduced load shedding will be covered by the KPK government.

The Chief Minister will select the feeders for the pilot project and nominate a Member of the National Assembly (MNA) or a Member of the Provincial Assembly (MPA) from the respective constituency to lead the anti-theft and recovery campaign. Non-cooperation by the nominated MNA or MPA will be considered a failure on the part of the KPK government.

Feeders’ statistics for FY 2023-24 based on the results are as follows: (i) up to 20 per cent loss (98 feeders no loadshedding) ;(ii) 20—40 percent loss (211 feeders 6-7 hours loadshedding) ;(iii) 40-60 per cent loss (224 feeders 12 hours loadshedding) ;(iv) 60-80 per cent loss (204 feeders 16 hours load shedding) ; and (v) above 80 per cent loss( 187 feeders 30 hours loadshedding).

Loss due to one-hour electricity supply per feeder, 20-40 per cent (Rs 0.031 million), 40-60 per cent (Rs 0.085 million), 60-80 per cent (Rs 0.145 million) and above 80 per cent (Rs 0.185 million). Loss due to one –hour electricity supply per feeder per month, 20-24 per cent (Rs 0.930 million), 40-60 per cent (Rs 2.550 million), 60-80 per cent (Rs 4.350 billion) and above 80 per cent (Rs 5.5 billion.

PESCO shall ensure the electricity supply to the selected “Feeders” and shall carry out load management on equitable basis in accordance with the AT&C results of individual “Feeders”. PESCO shall share status and updates of the daily activities to the Government of Khyber Pakhtunkhwa regarding antitheft & recovery campaign on weekly basis.

Obligations of the provincial government will be as follows: (i) payments against Electricity Supplied: The Government of Khyber Pakhtunkhwa shall bear and make good the financial loss of PESCO on account of “additional electricity” supply provided to the selected “Feeders” based on the AT&C losses of individual “Feeder”, at the end of each month ;(ii) Chief Minister Khyber Pakhtunkhwa, acting on behalf of the Government of Khyber Pakhtunkhwa shall direct the nominated MNA and/or MPA to lead the anti-theft and recovery campaign and create awareness about the same. Dereliction or non-cooperation on part of the nominated MNA and MPA shall be construed as dereliction and non-cooperation on part the Government of Khyber Pakhtunkhwa; (iii) Provincial Government shall ensure the timely payment of dues as per clause-4.1 at the end of each month, to ensure compliance with this Contract; and (iv) Provincial Government shall launch a public awareness campaign about: (a) importance of energy conservation; (b) the need for eradicating power theft; (c) the civic duty to pay electricity bills fully and in time; and (d) the reduction in loadshedding is dependent on faithful adherence to the contract.

Security Payment: The Government of Khyber Pakhtunkhwa shall deposit a security payment (amount to be decided at the time of signing of agreement) with PESCO at the time of executing the Contract.

Copyright Business Recorder, 2025