ADB deciphers power sector conundrum

ISLAMABAD: Exposing the Power Division’s claims of reforms in the power sector, the Asian Development Bank (ADB) has observed that weak regulatory frameworks and governance issues — including lack of transparency and poor performance — continue to prevent power distribution companies (Discos) from accessing commercial borrowing, thereby forcing them to rely on limited public and donor funding for investments, well-informed sources in the Ministry of Economic Affairs told Business Recorder.

These observations were made by the ADB Mission during its recent visit, during which challenges faced by Discos came under detailed discussion. The deliberations come at a time when the Power Division has replaced the Pakistan Electric Power Company (PEPCO) with the Power Planning and Monitoring Company (PPMC) — described by insiders as a “parking place” for retired power sector officials drawing hefty salary packages.

According to sources, the top man of PPMC — who was earlier declared ineligible for the position of CEO of CPPA-G by the cabinet of former prime minister Imran Khan — is reportedly receiving a monthly package of about Rs 3 million. Other officials have also been appointed on lucrative terms under the garb of “reforms” in the power sector, particularly in Discos. Notably, the position of Chief Strategy Officer, carrying a package of Rs 0.5 million per month, has been awarded to an individual with no prior experience in the power sector.

Energy sector: Leghari, ADB team discuss reforms

The ADB has pointed out that Discos in Pakistan are grappling with chronic challenges that undermine both operational efficiency and financial sustainability. High transmission and distribution losses, coupled with substantial collection shortfalls, have placed severe financial strain on these entities.

Weak regulatory frameworks and governance deficiencies — particularly lack of transparency and accountability — have further exacerbated the situation, making it difficult for Discos to manage their networks effectively. Poor financial performance has deprived them of access to commercial borrowing, leaving them dependent on scarce public or donor resources. Consequently, under funding and missed investment targets have resulted in unreliable electricity supply for consumers.

Meanwhile, rising electricity demand and the growing integration of distributed renewable energy sources — such as rooftop solar systems — have increased network management complexity, necessitating the adoption of modern, smart technologies.

The National Electric Power Regulatory Authority (NEPRA) has been imposing millions of rupees in fines on Discos for poor performance. However, these entities routinely challenge such penalties in various legal forums and often delay payment.

A key obstacle for Discos lies in upgrading their ICT infrastructure, which serves as the backbone for improving operational efficiency, reducing losses, and enhancing customer service. The deployment of Advanced Metering Infrastructure (AMI) and Advanced Planning and Monitoring Systems (APMS) across all Discos is a central component of the government’s strategy to reduce system losses and improve revenue collection and service quality.

AMI enables real-time monitoring of electricity usage, providing customers with granular consumption data and promoting informed energy decisions. Achieving this vision requires comprehensive ICT modernization, including the establishment of digital distribution dispatch centres and deployment of Supervisory Control and Data Acquisition (SCADA) systems.

The implementation of SCADA, the ADB noted, represents an innovative step forward, as it allows real-time data acquisition and system control, creating an integrated platform linking AMI, APMS, and distributed renewable resources for dynamic grid management. Through the use of machine learning algorithms and big-data analytics, SCADA can enable predictive maintenance and improved outage management. However, successful implementation will require meticulous planning, expert consultation, phased rollout, and a strategic roadmap to ensure tangible improvements in service delivery, grid stability, and energy efficiency.

The ADB further noted that load-shedding and power outages remain major challenges, particularly during peak demand periods when the network faces severe stress. During fiscal year 2023 (July 1, 2022–June 30, 2023), consumers in the service area of the Lahore Electric Supply Company (LESCO) experienced an average of two power outages per month, each lasting about 4.8 hours. However, given that outages are more frequent during peak periods and that LESCO operates in a densely populated area, the actual frequency and duration may be even higher.

Many consumers and industries rely on costly diesel generators during such outages, increasing their costs while depriving Discos of revenue. To stabilize the grid and enhance performance, the introduction of Flexible Alternating Current Transmission Systems (FACTS) devices is deemed crucial for reactive power compensation.

The ADB also highlighted that the rising penetration of Distributed Energy Resources (DERs) — particularly rooftop solar — and the anticipated expansion of electric vehicle charging infrastructure present new challenges for grid stability and efficiency.

Key concerns include voltage fluctuations caused by intermittent solar generation, reverse power flows that complicate protection systems, and excessive load on aging transformers. The absence of adequate energy storage further aggravates the situation, as excess solar power generated during low-demand periods cannot be absorbed effectively, leading to grid stress.

Moreover, the unpredictability of solar generation complicates energy forecasting, making grid management and load balancing increasingly difficult. Addressing these issues, the ADB stressed, will require substantial investment in grid modernization, real-time monitoring, advanced protection mechanisms, energy storage solutions, and modern distribution management systems.

Copyright Business Recorder, 2025