ISLAMABAD: Inefficiencies in electricity distribution companies (Discos) are inflating Pakistan’s circular debt by over Rs600 billion annually, which has now surged to a staggering Rs2.467 trillion. Despite recovery claims of over 92.44%, the sector continues to grapple with chronic losses, revealed recent data on Discos’ performance.
Discos are contributing Rs50 billion monthly to the circular debt. Alarmingly, a portion of this recovery—estimated between 10-15%—is achieved through overbilling, masking the real inefficiencies, according to officials managing Discos’ operations.
The inability of Discos to recover dues from private and public sector consumers has exacerbated the crisis. Total receivables have ballooned to Rs2.017 trillion, a 69.64% increase compared to Rs1.189 trillion in 2021. Notably, running defaulters, including influential political and industrial figures, owe Rs1.094 trillion, marking a significant rise from Rs900.82 billion in FY2022-23.
The inefficiency extends to loss-making Discos, where legitimate consumers are forced to bear additional financial burdens. Consumers in profit-making Discos have already contributed Rs125.78 billion in cross-subsidies in FY2025 through the Tariff Rationalisation Surcharge (TRS). For instance, Iesco consumers alone paid Rs65.88 billion, while Lesco and Gepco consumers paid Rs39.53 billion and Rs14.17 billion, respectively.
Transmission and distribution (T&D) losses beyond regulator-approved limits added Rs276.35 billion to the financial strain in FY2023-24. Additionally, shortfalls in the recovery of billed amounts contributed Rs314.5 billion to the circular debt.
Experts suggest that even partial recovery of outstanding dues could significantly improve liquidity in the system. However, the lack of proactive measures from the Power Division highlights the persistent neglect of this critical issue, leaving consumers to bear the brunt of inefficiencies in Pakistan’s power sector.
Story by Khalid Mustafa
