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NEPRA Warns Discos to Improve their Performance

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Editorial

National Electric Power Regulatory Authority (Nepra) has recently voiced its apprehensions regarding the declining performance of power Distribution Companies (Discos). Nepra indicated a significant reduction in electricity sales and an increase in losses and inefficiencies, amounting to Rs 596 billion, based on inside sources from CPPA-G, as reported by Business Recorder.

In an email dated July 30, 2024, Nepra communicated its concerns to the Central Power Purchasing Agency-G, the System Operator, sharing a report on circular debt for June 2024 and requesting a review.

Nepra’s observations unveiled a notable decrease in the Discos’ electricity purchases for FY 2023-24 to 11,142 GWHs, a 1% reduction compared to 16,696 GWHs for FY 2022-23. Additionally, the losses of Discos during FY 2023-24 increased to 18.31% compared to 16.84% during FY 2022-23, marking an increase of 1.47%.

The regulator emphasized that the allowed average target of Transmission & Distribution (T&D) losses for FY 2023-24 was 11.77%, and Discos breached the target by 6.54%, contributing approximately Rs. 276 billion to the circular debt for the fiscal year. Nepra indicated that the financial impact of the unrecovered amount increased to Rs. 315 billion in FY 2023-24 from Rs. 236 billion in FY 2022-23, despite the recovery percentage, which represents the amount of the unrecovered debt that was successfully collected, remaining at a concerning 92%.

Nepra highlighted that the circular debt situation for FY 2023-24 was particularly challenging. The increase in circular debt, around Rs. 83 billion, was primarily due to stock payments of Rs. 374 billion being made through the fiscal space. Moreover, inefficiency of Discos in terms of excess T&D losses and under-recovery contributed Rs. 596 billion to the circular debt.

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Nepra further shared specific details of the performance of some Discos, such as Lahore Electricity Supply Company (Lesco), Peshawar Electricity Supply Company (Pesco), Multan Electric Supply Company (Mepco), Islamabad Electric Supply Company (Iesco), Faisalabad Electric Supply Company (Fesco), and Gujranwala Electric Supply Company (Gepco). These details highlighted variations in T&D losses, recovery, and receivables for each company, providing a comprehensive view of the situation.

These findings underscore the pressing need for the power sector to urgently address the escalating inefficiencies and losses of the Discos. It is crucial for all stakeholders, including the Central Power Purchasing Agency-G, the System Operator, and other relevant entities, to play their part in ensuring the financial sustainability and reliability of our electricity supply.

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