ISLAMABAD: The Power Division has acknowledged its inability to address inefficiencies and mismanagement within the energy sector, leading to a circular debt surpassing Rs2.310 trillion. In response, the division is now proposing the establishment of support units for power distribution companies (DISCOs) comprising officials from intelligence and law enforcement agencies to tackle these challenges and reduce the circular debt.
As of the current financial year, DISCOs’ receivables have soared to Rs1.786 trillion, rendering the sector financially unsustainable. It is anticipated that these companies may have incurred losses of approximately Rs589 billion, including under-recoveries and losses exceeding the thresholds set by the National Electric Power Regulatory Authority (NEPRA).
In a recent Cabinet Committee on Energy meeting, the Power Division highlighted the historical context, noting that post-unbundling of the Water and Power Development Authority (WAPDA), electricity distribution responsibilities were assigned to 11 DISCOs across Pakistan, excluding Karachi, which is serviced by a private entity.
Despite being under the Ministry of Energy (Power Division), efficient management of DISCOs has remained a persistent challenge. Previous attempts to implement various management models have failed to produce significant improvements, leading to longstanding inefficiencies in the power sector.
The resultant mismanagement has derailed necessary reforms and turned these entities into a continuous financial drain on the national treasury. To mitigate these losses, the government initiated an anti-electricity theft campaign on September 7, 2023, aiming to recover dues from defaulters. However, there are concerns that DISCOs may not achieve the desired outcomes even with federal and provincial government support.
The proposal to create support units for DISCOs was discussed during the executive committee meetings of the Special Investment Facilitation Council (SIFC) held on April 24, 2024, and May 13, 2024. The Power Division emphasized that establishing these support units is crucial for enhancing DISCOs’ management and monitoring efficiency.
Story by Zafar Bhutta
