Six Discos: Irregularities/lapses of Rs 390 billion detected

The Auditor General of Pakistan (AGP) has unearthed lapses /irregularities of around Rs 390 billion in achievements of Nepra targets by six power distribution companies due to poor recovery of electricity bills, less revenue recovery, unjustified distribution margin and missing capital investment targets during the four years (2011-12 to 2015-16). The AGP said this in its report titled "Special Study Report on targets fixed by Nepra and Achievement by Peshawar Electric Supply Company (Pesco), Hyderabad Electric Supply Company (Hesco), Lahore Electric Supply Company (LESCO), Multan Electric Power Company (MEPCO), Islamabad Electric Supply Company (IESCO) and Tribal Electric Supply Company (TESCO) for the fiscal years 2011-12 to 2015-16, Audit Year 2017-18."

The Directorate General of Audit Power conducted a special study on targets fixed by NEPRA and achievements by the six power company distribution companies for the financial year 2011-12 to 2015-16 in March 2018. The main objectives of the study were to review the laws, rules and regulations, processes, procedures and internal controls for targets fixed by FEPRA and achievements by the companies.

The tariff determination set out various operational, technical and financial targets/ standards which deal with the overall performance of the DISCOs. These targets include transmission and distribution losses, revenue requirement comprising power purchase price, transmission and distribution losses impact, and distribution margin by determining O&M and approval for investment plan for distribution of power, energy loss reduction and secondary transmission lines and grid stations.

Keeping in view all aspects, the lapses/irregularities in achievements of Nepra targets by respective distribution companies have been pointed out in the findings.

Some of the key points include: loss of revenue of Rs 153.044 million was sustained due to transmission and distribution losses beyond NEPRA'S targets; less recovery of revenue worth Rs 82.754 billion was made against the target fixed by Nepra; excess expenditures of Rs 31.724 billion was made by LESCO, PESCO, HESCO, TESCO and IESCO on account of O&M than the limit fixed by NEPRA; unjustified distribution margin worth Rs 21.536 billion more than the permissible limit was retained by LESCO, MEPCO and HESCO; capital investment made by LESCO, HESCO and TESCO was Rs 17.551 billion less than NEPRA's target' unjustified excess retention of RORB worth Rs 784 million was made by LESCO in violation of Nepra's limit; consumer services and safety performance standards set by Nepra were not achieved by LESCO, MEPCO and HESCO; recovery plan was not achieved by MEPCO as per Nepra direction; recovery of use of system charges worth Rs 19.67 billion was not made by MEPCO from the other DISCOs; and non-recovery of receivable of Rs 56.806 billion and increasing trend of trade debtors and other receivable worth Rs 10 billion.

The AGP has recommended that T&D loses over and above Nepra targets need to be avoided. A reliable metering and recording system at every voltage level is required to be installed. A robust and inclusive recovery plan along with vigilant monitoring system needs to be put in place in the DISCOs. The excess retention on account of RoRB needs to be inquired into for fixing responsibilities.