ISLAMABAD - The public exchequer has incurred a loss of Rs403 billion in the fiscal year 2022-23 due to higher than Nepra approved losses and less recoveries which have declined by almost 4% as compared to previous fiscal by the ex-Wapda power distribution companies (Discos) and K-Electric, as the regulator has noted that given the ongoing poor performance the current DISCO setup is unlikely to be able to deliver the desired results.
The fiscal year 2022-23 portrays the dreadful picture with respect to number of fatalities which has reached 161 in all distribution companies, with PESCO’s share remaining high, followed by K-Electric, IESCO and HESCO, noted the performance evaluation report of the distribution companies for the FY2022-23 issued by Nepra here Monday.
It is evident that the performance of distribution companies (DISCOs) throughout 2022-23 remained subpar, and the expected power sector reforms were not achieved. Given the ongoing poor performance, it is apparent that, under the existing circumstances, the current DISCO setup is unlikely to be able to deliver the desired results, said the report. In light of these challenges, significant structural changes on a large scale are needed, the report observed and recommended that these changes could include division of large DISCOs into smaller units/entities, the provincialization of DISCOs, privatization or corporatization of DISCOs on public private partnership mode, reduction in the influence of unions within the power sector, discontinuation of AT&C losses policy by using modern technology, outsourcing of high loss feeders, demand side management, and customer-oriented business approach.
No significant improvement has been witnessed on part of some DISCOs in this regard. During FY2022-23, the overall actual losses of DISCOs were 16.38% against the actual loss of 16.69% in FY 2021-22. The actual T&D losses are much higher than the allowed T&D losses for FY 2022-23, which is 12.21%. Unfortunately, the majority of DISCOs have not adhered to the NEPRA given targets, except FESCO, GEPCO, and K-Electric which have managed to keep their losses below the levels or equal to targets set by NEPRA. However, other DISCOs have exceeded these limits, which contributed to a substantial loss of over Rs. 166 billion to the national exchequer.
It is an undeniable fact that DISCOs are deliberately drawing less power than their demand, despite being provided with an adequate quota on account of loadshedding based on Aggregate Technical & Commercial (AT&C) losses policy. The AT&C based loadshedding is still being carried out and DISCOs particularly PESCO, QESCO, SEPCO and HESCO have considered it an easy path for them to manage the recovery rather than to put the efforts and ensure maximum collection.
On recoveries, the report said it is observed that only one DISCO i.e., IESCO has significantly achieved the target of 100% recovery in fiscal year 2022-23. Moreover, GEPCO, FESCO, and MEPCO are nearest to the target and achieved the recoveries of 98 to 99%. Similarly, PESCO, LESCO and K-Electric have crossed the figure of 90%. Moreover, HESCO and SEPCO remained the same as in previous year, somewhere in middle with reported values of 75.9 and 68.2%. However, QESCO has been witnessed as worst performing DISCO among all with the reported position of 36.9%.
NEPRA determines the consumer end tariff for the DISCOs on a 100% collection basis and does not allow any inefficiency on this account. During FY2022-23, it has been observed that the overall recovery remained 86.26% as compared to 90.51% during 2021-22, which is almost 4% less than the previous financial year. It is relevant to state that the low recovery ratios have effectively crumbled the revenues beyond acceptable levels, which has resulted in a loss to national exchequer of over Rs. 263 Billion.
On System Average Interruption Frequency Index (SAIFI), the report said that none of the distribution companies have been able to meet the SAIFI standard of 13. Regarding System Average Interruption Duration Index (SAIDI), the report said that almost all DSICOs are far away from the set Standard of 14 minutes. On the issue of pending connections, the performance report said that a total of 278,815 connections were not given to the eligible consumers despite the fact that they made payments due to which more than 1100MW demand/load could not be served, which is a serious matter of concern as the ample generation capacity is available.
It’s noteworthy that IESCO, LESCO, MEPCO, and HESCO have claimed that they have surpassed this requirement by providing new connections to over 95% of their eligible consumers, meeting the specified standard. In contrast, SEPCO, and K-Electric did not achieve the target but remained nearest to the target. However, PESCO, GEPCO, FESCO, and QESCO, fell short of the set limit, as they did not provide new connections to 8.33%, 15.01%, 34.8%, and 9.27% of eligible consumers, respectively, within the specified time frame, despite these consumers having made their payments on time.
Taking a closer look, the major part pertains to domestic in terms of number & load (MW), however, the share of industrial category is also on higher side. Nonmeeting up of industry demand by DISCOs particularly LESCO & MEPCO knowing the fact that they are good paying consumers clearly indicate the seriousness of DISCOs to make themselves profitable. On one side, LESCO & MEPCO have claimed that they have provided more than 95% of new connections to the eligible consumers as per requirements of PSDR 2005, whereas, on the other side, the number of pending connections of both the entities are on top among all the DISCOs. In this regard, serious observation was raised and both the utilities were asked through written notices.
Loadshedding for an average of 2 to 3 hours daily is being carried out in IESCO, FESCO, GEPCO, LESCO, MEPCO and SEPCO. In contrast, PESCO, QESCO, HESCO and K-Electric have reported loadshedding duration hours 4.5 to 10.25 hours, said the report. It is further observed that distribution companies especially PESCO, QESCO, SEPCO, HESCO and K-Electric are carrying out loadshedding as per AT&C losses criteria which is not in line with the requirements Performance Standards (Distribution) Rules 2005 and has never been recognized by the NEPRA.
Regarding complaints, the report said that the data provided by the DISCOs indicates that a total of 3,694,861 complaints were received in the fiscal year 2022-23, related to different issues. It is noteworthy that some DISCOs received a lower number of complaints, which suggests that there may be deficiencies in the complaint handling mechanisms, reporting systems and development of database in these DISCOs. Moreover, it is noted with concern that SEPCO did not receive a single complaint on any given day in each of its complaint centers and NEPRA has expressed serious reservations regarding the data reported by DISCOs.