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EDITORIAL: Some things never change. Nepra’s (National Electric Power Regulatory Authority’s) Performance Evaluation Report for Fiscal Year 2021-22 shows that poor governance and mismanagement continued to plague Discos (distribution companies) as they rounded up a combined loss of around Rs170 billion.

Only Rs2.517 trillion was collected against the billed amount of Rs2.686 trillion during the period under review, putting additional and completely unnecessary burden on an exchequer already dangerously in red. Now the so-called circular debt will take another big jump and desperately needed power sector reforms will be pushed further down the road.

As expected, Peshawar, Hyderabad, Sukkur and Quetta Discos were the worst in terms of T&D losses and recovery, blowing a Rs 122 billion hole in the national kitty.

GEPCO, FESCO, MEPCO and K-Electric, on the other hand, achieved their Nepra-determined targets and will now compensate for the losses of their less efficient counterparts. It’s also quite shocking that despite all the uproar for so long they still haven’t even been able to improve their performance in terms of much simpler tasks than their core business of distributing power.

Of the total number of complaints, for example, 46 percent were received by KE alone, which shows that others haven’t pulled up their socks yet and Nepra has rightly expressed serious reservations about the data handed over by ex-WAPDA Discos.

FY21-22 also paints a dreadful picture of fatalities for Disco employees as well as the public — 196, 11 percent higher than the previous year. Nepra duly imposed heavy fines and ordered adequate compensation for affected families, including offering employment to family members of the deceased, but given their track record this problem is unlikely to go away soon.

Because, as always, most deaths occurred due to lack of earthing/grounding of poles/structures in the distribution system, even though the regulator has been taking “serious notice” and crying itself hoarse about this issue since forever.

Not surprisingly, then, Nepra once again reached the same conclusion that all stakeholders are already upset about; that Discos’ performance continued to disappoint and power sector reforms could not be implemented. But that can’t be the end of it as we go round the same circle again in the ongoing fiscal year.

It’s precisely because reforms are always put off, citing one reason or another, that there’s no improvement in the system, not the other way around. Therefore, the power ministry must be given the same lecture all over again, that there is no option but to initiate “structural changes on a mega scale”, such as bifurcation and subsequent privatisation of Discos, and also controlling the influence and interference of unions.

As urged before in this space, it is first necessary to separate good Discos from bad ones, then incentivize privatisation of the former to give the private sector something concrete for its indulgence in what is, after all, a very complicated and inefficient sector.

Yet, for some reason, successive governments have been locked in the one-step-forward-two-steps-back motion in this matter. That is why Prime Minister Shehbaz Sharif’s latest initiative, to form a committee to look into ways of promoting private sector participation in Discos, is being watched very closely.

Hopefully, it will not overlook the fact that cutting red tape and overcoming legal irritants will only be one part of the solution. It must also find ways of making this enterprise profitable, without which serious private sector players will not be lured.

The committee must also realise that there is very little time to roll out its ideas and then get down to feasibility studies, etc. Nobody has the luxury of time when the economy is ticking like a bomb, with Discos and the like, and their losses, providing the spark that could light it up sooner rather than later.

Copyright Business Recorder, 2023


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Aamir Latif Feb 06, 2023 12:10am
Very fair analysis, these loss making Disco's should reduce losses above any political compulsion or disconnect power supply... As electricity becomes more expensive, kundacsysyrm and theft will rise.. Despite good performance of KE for example, you walk in any shanty area of Karachi, kunda system flourishes... So there is a point to reduce electricity rates so as people could pay reducing losses or else nightmare continues
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bonce richard Feb 06, 2023 06:32pm
@Aamir Latif, If we increase the tariff it effects the cost of production and our export will be more expensive than in other countries and we cannot compete. No one think about the country our army generals are busy for making money
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