Discos add Rs600bn to circular debt a year

ISLAMABAD: The Discos fraught with inefficiencies are causing an addition of over Rs600 billion in the circular debt per annum that has now increased to Rs2.467 trillion, showing that the government’s top mandarins have failed to arrest the losses on account of recovery and theft of electricity, reveals the latest data about electric power distribution companies.

This means Discos are adding Rs50 billion a month to the circular debt despite the recovery claims up to over 92.44 percent. “In the recovery of electricity billed to consumers, 10-15 percent recovery is made by Discos through overbilling every year to show an improvement in overall recovery,” the official handling the Discos affair told The News.

More importantly, Discos have also failed to recover their dues from the private and public sector consumers which have now increased by 69.64 percent to Rs2.017 trillion if compared with receivables of Rs1.189 trillion in 2021. However, the total dues of Discos are to the circular debt despite the recovery claims up to over 92.44 percent. “In the recovery of electricity billed to consumers, 10-15 percent recovery is made by Discos through overbilling every year to show an improvement in overall recovery,” the official handling the Discos affair told The News.

More importantly, Discos have also failed to recover their dues from the private and public sector consumers which have now increased by 69.64 percent to Rs2.017 trillion if compared with receivables of Rs1.189 trillion in 2021. However, the total dues of Discos are higher by 16.79 percent if compared with the receivables of Rs1.727 trillion in 2023, which is just higher by Rs467 billion than the circular debt.

So much so, running defaulters which mainly include towering political and industrial figures owe Discos Rs1.094 trillion. The running defaulters’ unpaid bills continue to put immense pressure on the system. The amount that the system has to recover from running defaulters has increased by Rs194 billion to Rs1.094 trillion in 2023-24 as compared to running defaulters of Rs900.82 billion for FY2022-23. This aspect itself depicts the performance of Discos and also raises concerns on recovery undertaken during the fiscal year.

If the Discos manage to materialise their dues more than fifty percent, the system can have a breath of sigh and it would improve the liquidity of Discos enough to pay the amounts of power plants and offload other liabilities, but again the top decision makers perched in the Power Division are not paying due heed to this chronic issue.

According to the latest data, the consumers of profit-making Discos have also been fleeced with Rs125.78 billion so far in the ongoing FY25 to provide cross-subsidy to consumers of loss-making distribution companies for ensuring a uniform tariff across the country.

The data compiled by Nepra shows that consumers of Iesco paid cross-subsidy of Rs65.88 billion to consumers of loss-making Discos through tariff Rationalisation Surcharge (TRS). Likewise, Gepco’s consumers paid Rs14.17 billion, Lesco’s consumers Rs39.53 billion and Mepco’s consumers paid Rs6.19 billion as cross-subsidy, but no visible and result-oriented and sustainable efforts have been initiated to improve the loss-making Discos since decades. However, the decision-makers in the federal government continued to punish legitimate consumers for the inefficiencies in loss-making Discos.

In FY2023-24, due to T&D losses across all Discos in excess of regulator-approved levels, the sector faced an additional financial burden of approximately Rs276.35 billion. Moreover, shortfalls in the recovery of billed amounts added Rs314.506 billion to the circular debt.