Discos contributing over Rs600bn to circular debt each year

• Running defaulters owe Rs1.094tr to Discos.
  
• Companies adding Rs50bn a month to circular debt.
• 10-15% recovery made via over-billing every year.

ISLAMABAD: Amid the government's efforts to improve the country's economic indicators, it has been revealed that the electricity distribution companies (Discos) are causing an addition of over Rs600 billion in circular debt each year, The News reported on Monday.

The circular debt has now increased to Rs2.467 trillion which reflects that the government has failed to arrest the losses on account of recovery and theft of electricity.

This means Discos are adding Rs50bn a month to the circular debt despite the recovery claims up to over 92.44%.

"In the recovery of electricity billed to consumers, 10-15% recovery is made by Discos through over-billing every year to show an improvement in overall recovery,” the official handling the Discos affair told the publication.

More importantly, Discos have also failed to recover their dues from the private and public sector consumers which have now increased by 69.64% to Rs2.017tr if compared with receivables of Rs1.189tr in 2021. 

However, the total dues of Discos are higher by 16.79% if compared with the receivables of Rs1.727tr in 2023, which is just higher by Rs467bn than the circular debt.

So much so, that running defaulters which mainly include towering political and industrial figures owe Discos Rs1.094tr.

The running defaulters’ unpaid bills continue to put immense pressure on the system. The amount that the system has to recover from running defaulters has increased by Rs194bn to Rs1.094tr in 2023-24 as compared to running defaulters of Rs900.82bn for FY2022-23. This aspect itself depicts the performance of Discos and also raises concerns about recovery undertaken during the fiscal year.

If the Discos manage to materialise their dues more than 50%, the system can have a breath of sigh and it would improve the liquidity of Discos enough to pay the amounts of power plants and offload other liabilities, but again the top decision makers perched in the Power Division are not paying due heed to this chronic issue.

According to the latest data, the consumers of profit-making Discos have also been fleeced with Rs125.78bn so far in the ongoing FY25 to provide cross-subsidy to consumers of loss-making distribution companies for ensuring a uniform tariff across the country.

The data compiled by National Electric Power Regulatory Authority (Nepra) shows that consumers of Lahore Electric Supply Company (Lesco) paid a cross-subsidy of Rs65.8bn to consumers of loss-making Discos through tariff Rationalisation Surcharge (TRS). 

Likewise, Gujranwala Electric Power Company's (Gepco) consumers paid Rs14.17bn, Lesco’s consumers Rs39.53bn and Multan Electric Power Company's (Mepco) consumers paid Rs6.19bn as cross-subsidy, but no visible and result-oriented and sustainable efforts have been initiated to improve the loss-making Discos since decades. However, the decision-makers in the federal government continued to punish legitimate consumers for the inefficiencies in loss-making Discos.

In FY2023-24, due to T&D losses across all Discos in excess of regulator-approved levels, the sector faced an additional financial burden of approximately Rs276.35bn. Moreover, shortfalls in the recovery of billed amounts added Rs314.506bn to the circular debt.