AIRLINK 80.20 Increased By ▲ 1.81 (2.31%)
BOP 5.29 Decreased By ▼ -0.05 (-0.94%)
CNERGY 4.35 Increased By ▲ 0.02 (0.46%)
DFML 33.19 Increased By ▲ 2.32 (7.52%)
DGKC 78.14 Decreased By ▼ -0.37 (-0.47%)
FCCL 20.44 Decreased By ▼ -0.14 (-0.68%)
FFBL 32.10 Decreased By ▼ -0.20 (-0.62%)
FFL 10.24 Increased By ▲ 0.02 (0.2%)
GGL 10.35 Increased By ▲ 0.06 (0.58%)
HBL 117.95 Decreased By ▼ -0.55 (-0.46%)
HUBC 135.01 Decreased By ▼ -0.09 (-0.07%)
HUMNL 6.95 Increased By ▲ 0.08 (1.16%)
KEL 4.53 Increased By ▲ 0.36 (8.63%)
KOSM 4.79 Increased By ▲ 0.06 (1.27%)
MLCF 37.98 Decreased By ▼ -0.69 (-1.78%)
OGDC 133.77 Decreased By ▼ -1.08 (-0.8%)
PAEL 23.58 Increased By ▲ 0.18 (0.77%)
PIAA 26.85 Increased By ▲ 0.21 (0.79%)
PIBTL 7.01 Decreased By ▼ -0.01 (-0.14%)
PPL 113.10 Decreased By ▼ -0.35 (-0.31%)
PRL 27.82 Increased By ▲ 0.09 (0.32%)
PTC 14.75 Increased By ▲ 0.15 (1.03%)
SEARL 57.85 Increased By ▲ 1.35 (2.39%)
SNGP 67.36 Increased By ▲ 1.06 (1.6%)
SSGC 11.02 Increased By ▲ 0.08 (0.73%)
TELE 9.25 Increased By ▲ 0.10 (1.09%)
TPLP 11.65 Decreased By ▼ -0.02 (-0.17%)
TRG 73.00 Increased By ▲ 1.57 (2.2%)
UNITY 24.90 Increased By ▲ 0.39 (1.59%)
WTL 1.40 Increased By ▲ 0.07 (5.26%)
BR100 7,513 Increased By 19.8 (0.26%)
BR30 24,646 Increased By 88 (0.36%)
KSE100 72,192 Increased By 139.6 (0.19%)
KSE30 23,787 Decreased By -20.7 (-0.09%)

You can come up with even fancier way of circular debt settlement next year, can be craftier in the next base tariff ‘rationalization’ exercise due very soon, and can even think of new ways of adding more surcharges and levies on electricity consumption – you will still start the day with a colossal circular debt staring right in your eye. In today’s times – that starting point could be north of Rs400 billion.

The regulator has recently issued Performance Evaluation Report FY23 for Distribution Companies –and it reads like the 10th sequel to a horror novel. For the regular readers, it is just worse numbers in most cases and slight improvements in a few – with the recipe for disaster staying constant.

Here is how it goes. The government does not let go of the discos’ control, the authority sets ambitious efficiency targets, no fear of consequences leads to no incentive for improvement, the bad ones remain bad (or go worse), the good ones have stayed good for a while that there is no more room for improvement, the national average tariffs keep getting higher, and that feeds into another cycle of higher efficiency related losses. Rinse. Repeat.

The T&D losses have been really sticky for quite some time, as the good-performing discos are now close to universally accepted T&D loss levels in single digits. The ones at the other spectrum seem to have stuck in a loop with little to no improvement seen for the best part of last five years. The T&D losses continue to breach the allowed limit by over 4 percentage points. With ever-rising tariffs – the financial burden increases.

Much worse is the collection problem. The tariff exercise assumes 100 percent recovery. The year gone by returned the lowest recovery in ten years at 86 percent. Combined, the two problems are worth Rs402 billion. Mind you, these numbers are till end June 2023. Massive tariff adjustments have taken place since – and much of the same in terms of losses in percentage terms and much higher in rupee terms is in store for FY24.

Privatization of discos is a no-brainer, but that will not be a magic wand. The issues are complicated with technical, security and governance-related affairs overlapping. Political patronage has been linked to high inefficiencies and with enough documented evidence from the past. Provincial governments will have to be made responsible in some way for the mess. Millions of honest paying consumers across the country must not continue to pay for the ill-doing of a few.

Comments

200 characters
Test Feb 29, 2024 02:57pm
We can pay bills no issue we should not allow discos to be sold to some private company we should as nation can pay the bill but will not allow these entities to be sold see K electric behaviour now.
thumb_up Recommended (0) reply Reply