News of Pakistan’s power distribution companies’ mounting losses due to inefficiencies and under-recoveries surfaces almost daily. The government restructured nearly half of the power sector’s Rs2.4 trillion circular debt by signing a Rs1.225 trillion financing agreement with 18 commercial banks, to be recovered through surcharges on consumers’ electricity bills. Yet, the circular debt continues to grow.
According to the Power Division’s official circular debt report, as of July 2025, DISCOs alone contributed at least Rs87 billion to the pile due to inefficiencies and under-recoveries — even as their past losses were covered under the restructuring deal.
Despite these enormous losses, the financial transparency of government-owned distribution companies remains abysmal. Out of ten DISCOs, only GEPCO has its latest annual report updated; several others have not released financials since 2022, while TESCO and HESCO have not disclosed their reports since 2018–19 and 2019–20, respectively.
This opacity leaves no clear picture of how much these companies are losing, how efficiently they are operating, or how much government subsidy continues to flow into them — all at the cost of taxpayers’ money.
The lack of updated reports is more than mere administrative negligence; it effectively conceals the financial state of the sector and blurs accountability. This vacuum allows inefficiency, mismanagement, and corruption to persist unchecked, as massive sums are routinely absorbed or written off without public scrutiny.
The Auditor General of Pakistan’s (AGP) report on the accounts of the Power Division, its attached entities, and NEPRA for FY2024–25 lays bare the scale of these inefficiencies. The report reveals that excess transmission and distribution (T&D) losses across the DISCOs resulted in financial damage amounting to Rs277 billion — a figure that underscores how poor system maintenance and theft continue to drain the sector’s finances.
The AGP report further exposes glaring lapses in operational management. It notes that DISCOs failed to remove electrical equipment such as meters from at least 541,053 consumers combined, resulting in an additional Rs225 billion loss during FY2022–23 and FY2023–24. These inefficiencies reflect deep-rooted administrative and technical shortcomings that neither government restructuring nor financial injections have managed to fix.
Worse yet, the government itself has contributed to the worsening fiscal strain. The AGP report highlights that promised subsidies amounting to Rs189 billion to distribution companies — including HESCO, IESCO, LESCO, QESCO, and SEPCO — for FY2022–23 and FY2023–24 were never actually disbursed. This failure to release committed funds not only added pressure to already struggling companies but also inflated the circular debt further.
These findings raise fundamental questions about the credibility of the government’s circular debt management strategy. On one hand, consumers are burdened with surcharges to recover financing arranged under the restructuring scheme; on the other, DISCO inefficiencies and delayed subsidies continue to undo whatever progress those efforts might have made.
The AGP’s revelations underline a troubling pattern — a system where losses are perpetually recycled rather than resolved. Without timely audited financial statements, independent oversight, and accountability, the true scale of inefficiency and corruption remains hidden behind bureaucratic opacity.
Until DISCOs are compelled to regularly disclose their audited financial reports and the government enforces strict performance-based accountability, the “mystery” of their finances will persist. And as history shows, that mystery is one consumers and taxpayers continue to pay for — quite literally — with every inflated electricity bill.
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