National Electric Power Regulatory Authority (Nepra) has sounded the alarm on dire state of power sector in its State of Industry Report 2023. The report underscores urgent need for a comprehensive overhaul of Distribution Companies (Discos) to address critical governance, planning, and operational shortcomings across the entire power sector.
The power sector is currently embroiled in a severe financial crisis, with the circular debt surging to Rs 2.6 trillion by October 2023 – a 13 percent increase from previous fiscal year’s Rs 2.3 trillion. This crisis is further compounded by significant losses and a decline in the recovery of electricity bills. Entities like Peshawar Electric Supply Company (PESCO), Tribal Electric Supply Company (TESCO), and Sukkur Electric Power Company (SEPCO) have reported substantial losses, contributing Rs 160.49 billion to the circular debt. PESCO alone has added Rs 77.35 billion to the debt, underscoring severity of the issue. Distribution Companies play a pivotal role in the power sector, responsible for delivering electricity to consumers. It is unfortunate that successive government did not pay any attention to bring improvement in the Discos and deal with the issue of mounting circular debt, which has now become unsustainable.
NEPRA, in its report, has advocated for horizontal restructuring of power distribution companies to enhance competition and efficiency. Breaking up monopolies into smaller, more manageable units is expected to encourage innovation, foster accountability and promote customer-centric service delivery. It has also suggested introducing private sector competition down to feeder level to enhance efficiency. This competition can lead to improved services, technological innovation and cost-effectiveness in electricity distribution. Breaking down distribution companies into smaller units will allow each regional Disco to focus on unique challenges and opportunities within its designated area. This approach can lead to tailored solutions and improved performance. Undoubtedly, the power sector is at a critical juncture that demands immediate attention and comprehensive solutions. The recommendations put forth by Nepra, including overhaul of Discos, are crucial steps toward achieving a sustainable and efficient power sector. Any incoming government will have to move swiftly to address issues such as circular debt, losses and recovery of electricity bills to ensure a reliable and affordable power supply for the nation.
