ISLAMABAD: A performance audit of the Board of Directors (BoD) of Faisalabad Electric Supply Company (Fesco) has uncovered serious governance lapses, operational inefficiencies, and significant financial deterioration during fiscal years 2021-22 and 2022-23, resulting in mounting losses and failure to meet key targets set by the Ministry of Energy (Power Division).
According to the audit findings, Fesco’s overall operational performance remained unsatisfactory due to non-achievement of annual operational and financial benchmarks. The company failed to meet critical targets relating to recovery, loss reduction, infrastructure development, and service delivery, contributing to an increase in circular debt and weakening its financial position.
The audit noted that Aggregate Technical and Commercial (AT&C) losses stood at 10.26 percent against the target of 8.84 percent, reflecting a deviation of 1.42 percent. This resulted in excess losses of 211.694 million units valued at Rs 6.298 billion beyond the limits set by the National Electric Power Regulatory Authority (Nepra).
Performance gaps were also observed in meter reading accuracy, with Mobile Meter Reading (MMR) accuracy falling short by 1 percent for general consumers, 11 percent for industrial users, and 17 percent for tube-well consumers. Similarly, only 337 kilometres of transmission lines were completed under the 8th System Transmission and Grid (STG) programme against the target of 530 kilometres.
The audit highlighted extremely poor performance in meter replacement, as only 18,832 non-static meters were replaced against a target of 1.152 million, leaving a shortfall of over 1.13 million meters. In addition, of 16,066 required Automatic Meter Reading (AMR) meters, only 6,558 were installed, indicating a gap of 9,508 meters.
Fesco also lagged in extending new connections, providing only 804 industrial connections against a target of 1,516. Furthermore, the company remitted Rs 333.977 billion to the Central Power Purchasing Agency-Guaranteed (CPPA-G) against an invoice of Rs 350.617 billion as of June 30, 2023, reflecting a shortfall of 4.75 percent.
Financially, the company’s situation worsened significantly. Accumulated losses surged from Rs 77.475 billion in June 2022 to Rs 96.763 billion by June 2023. The company’s equity position deteriorated from a positive Rs 3.713 billion to negative Rs 9.201 billion, driven by a net loss of Rs 14.983 billion.
The audit attributed the losses primarily to a sharp increase in operational expenses, with Operation and Maintenance (O&M) costs rising by 93 percent—from Rs 20.239 billion in 2017-18 to Rs 38.989 billion in 2022-23. Other expenses also increased abnormally by 473 percent during the same period.
The report criticised the BoD for failing to establish Key Performance Indicators (KPIs) for management and not developing a monitoring and evaluation framework, despite this being a requirement within 30 days of signing the performance agreement with the Power Division. This lack of oversight, the audit noted, compromised accountability and weakened organisational governance.
Governance irregularities were also identified in the constitution of eight sub-committees, including Audit & Finance, HR and Legal, and Technical Committees, which were formed without proper approval of the Board. The audit observed that bypassing prescribed procedures undermined decision-making processes and institutional integrity.
The company’s failure to implement critical initiatives such as Automated Metering Infrastructure (AMI), timely meter replacements, feeder bifurcation, and Health, Safety and Environment (HSE) policies also contributed to operational inefficiencies and increased safety risks, including a rise in fatal and non-fatal incidents.
The audit concluded that weak governance, lack of strategic oversight, and ineffective performance monitoring by the BoD resulted in financial losses of Rs 16.968 billion over the two-year period and raised concerns about the company’s long-term viability.
In its response, Fesco management cited “unavoidable circumstances” and external factors beyond its control for failing to meet certain targets. However, the audit rejected this explanation, emphasizing that the BoD remains responsible for ensuring effective implementation of strategic plans and achieving agreed performance benchmarks.
Copyright Business Recorder, 2026
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