Nepra has issued the State of Industry Report FY2021, and it is a refreshing read, for the richness of data and presentation. What is more refreshing is the remarkable turnaround in the performance of electricity distribution companies (discos). Not often does one have the chance to applaud the government on anything in the power sector. But improving the recovery rate of electricity billing by 9 percentage points in just 12 months to 97.3 percent is no small feat. Cliched as it may sound, credit where it is due.
The cumulative loss resulting from lower collection and overrun of T&D losses was brought down by Rs100 billion in FY21 – down to Rs120 billion from Rs220 billion a year ago. One giant leap seems to have made for all the steps missed in the last five years, at least in terms of collection ratio. And this is despite a 20 percent rise in average tariffs. Finally, something seems to be working. And whatever it is, must continue.
That said, there is still ample that needs to be done on the distribution losses front – as the total T&D losses of the discos (ex-KE) stood at 17.95 percent. This is only slightly down from 18.05 percent last year, and barely different from the 10-year average of 18.5 percent. Unlike the recovery ratio - where Nepra assumed 100 percent billing collection - there is ample allowance for T&D losses.
The allowance stood at 13.5 percent for FY21, which simply means that much is already accounted for in the amount billed. The discos missed the target by 3.4 percentage points, with an impact of Rs83 billion. The financial impact of T&D losses has outdone that of collection, a first in a long time. Here is hoping, all efforts will now go in to improve T&D losses – to further bring down the loss with which the race starts.
Power distribution in FY21 went up by 8 percent in year-on-year FY21 – which is nothing to boast of, considering the pandemic impact. Encouragingly, industrial demand went up by 16 percent year-on-year., restoring the share to 25 percent. Industrial consumers are considered the best paying ones, but even domestic billing collection surpassed industries, for the first time ever. Recovery from domestic sector is the highest among all categories at 98 percent. This is a good start and needs to be consolidated. It is never too late for reforms.
Comments are closed.