ISLAMABAD: National Electric Power Regulatory Authority (Nepra) has decided to initiate legal action against the DISCOs who contributed to circular debt of Rs 276 billion in terms of increase in Transmission and Distribution (T&D) losses, well-informed sources in Nepra told Business Recorder.

The power sector Regulator has taken this stance while going through the Circular Debt (CD) report for June, 2024 received from CPPA-G through of July 30, 2024.

As per the report, DISCOs electricity purchases for the FY 2023-24 have been reduced to 115,142 GWh, ie, 1% less as compared to 116,696 GWh for the FY 2022-23. However, DISCOs losses during FY 2023-24 have increased to 18.31% as compared to 16.84% during FY 2022-23, ie, increase of 1.47%.

Discos add Rs596bn to circular debt

According to Registrar Nepra, the Regulator had allowed average target of T&D losses for the FY 2023-24 was 11.77%. Thus, DISCOs have breached the target by 6.54%. This breach of target contributed around Rs. 276 billion in circular debt for the FY 2023-24. This is despite the fact that DISCOS have been allowed an investment amount of Rs. 163.1 billion for the FY 2023-24 to improve their network.

Moreover, although the recovery percentage has remained the same, ie, 92% for the FY 2023-24, as compared to FY 2022-23, however, the financial impact of unrecovered amount has increased to Rs. 315 billion in FY 2023-24 as compared to Rs. 236 billion for the FY 2022-23. Nepra is of the view that the increase in circular debt for the FY 2023-24, remained around Rs. 83 billion, primarily due to the fact that payment of Rs. 374 billion has been made though fiscal space. However, inefficiency of XW DISCOS in terms of excess T&D Losses & under recovery resulted in contribution of Rs. 596 billion in the circular debt.

NEPRA Registrar has further stated, the Authority has gone through the report and while showing serious concerns has decided to initiate legal action against the DISCOS who contributed in circular debt in terms of increase in T&D losses and decrease in recovery in FY 2023-24 as compared to FY 2022-23. Besides this, the Authority has also desired to bring this to the attention of Secretary Power Division as these Discos are under administrative control of Power Division.

Nepra has asked Secretary Power Division to look into the matter personally and take necessary actions/measures in order to overcome the inefficiencies of DISCOS and to make the improvements inthe best interest of consumers and as well as national exchequer.

Copyright Business Recorder, 2024