Independence recommended: Nepra says Discos’ setup unable to deliver.

ISLAMABAD: While hurling accusations of data fudging on Distribution Companies (Discos), the National Electric Power Regulatory Authority (Nepra) has asserted that existing setup is unable to deliver, recommending independence of Discos from Power Division’s control with complete financial controls.

The regulator, in its report performance evaluation report of Discos and KE 2018-18 as compared to 2014-15 through 2017-18, has also observed that Discos has inflicted financial loss of Rs215.5 billion to the national during this period by breaching different targets.

The Nepra being a regulator has been advising and directing the Discos for taking effective measures to maintain their losses closer to the Nepra targets. But unfortunately, all Discos have breached the regulator’s determined targets except Gepco and Fesco and contributed a loss of around Rs38 billion to the national exchequer. Particularly, Pesco, Hesco, Sepco and Qesco have shown the worst performance among all Discos in this regard.

According to the regulator, Discos have to realise that collection of maximum revenues is the only reason to maintain their financial health, which can also play an effective role in reducing the burden of circular debt. However, the situation is reciprocal and Discos (Qesco, Sepco and Hesco, Pesco and Iesco) have failed to achieve full recoveries in FY 2018-19.

This has resulted in a huge loss to national exchequer i.e. Rs171.5 billion, which is 200 percent more than the last year i.e. 2017-18. The low recovery ratios have effectively crumbled the revenues beyond acceptable levels and no significant improvement has been observed despite continuous regulatory directions to the poor performing Discos.

The report contains two types of data related to pendency of ripe connections. One is for FY 2018-19 and second is for the period of July to December, 2019. The data submitted by Discos for the FY 2018-19 does not reflect ground realities as the Nepra team during visits of different Discos found that 100 to 200 connections per Sub-Division were pending since last six months.

Whereas, the data shows that Iesco, Pesco and Hesco have provided almost 100 percent connections within the time frame as prescribed in the PSDR 2005. Further, Lesco, Qesco and K-Electric have submitted that they have also provided more than 95 percent of applied connections in 2018-19.

On the other hand, the data pertaining to pending ripe connections from July-December, 2019 seems somehow realistic, but shows miserable figure i.e. 215,544. The regulator says that it is a known fact that power generation is available in abundance and capacity payments are being made for such huge capacity.

Whereas in comparison of such ample generation, electricity demand has not been arising as per forecasted results and this has created a big gap between demand and supply, which is increasing year by year.

In such scenario, non-provision of new connections by the distribution companies actually shows their non-seriousness towards the increase in revenues subsequently reduction in circular debt and ultimately betterment of power sector.

Load Shedding: The report says that although the duration of load shedding has been decreased in FY 2018-19 as compared to previous years, but it can be eliminated if Discos avail 100 percent of their allocated quota of power.

During the reported period, it came to the knowledge of Nepra A that Discos are carrying out load management as per AT&C losses criteria. But it is a matter of concern that criteria set by the Discos are not in line with the requirements of Nepra Performance Standards.

Therefore, Discos are required to submit their proposals regarding amendment in the said Rule of Performance Standards or revise their criteria as per Nepra laws. Safety: FY 2018-19 has given a dreadful picture with respect to number of fatalities both for employees and public occurred in all distribution companies i.e. 175, which is around 14 percent more than the last year 2017-18.

The report also depicts a terrible figure of fatal accidents for the period from July to December, 2019 i.e. 120. During both the periods, KE’s share remained high with the number of 54 and 52 followed by Pesco and Iesco.

Nepra took serious notice of such increasing number of fatalities in Karachi and service territories of Pesco and Iesco, and decided to conduct investigations under Section 27A of the Nepra Act.

Accordingly, investigation against K-Electric was conducted and based on the findings of investigation report K-Electric has been penalized by Rs50 million along with some directions particularly regarding completion of earthing/grounding of its distribution system in order to adhere with safety standards and develop safety culture in its service territory.

Further, investigations against Pesco and Iesco on account of fatal accidents occurred during the period of July to December, 2019 are ongoing. During the FY 2018-19, Nepra says it continued monitoring activities including data verification and found that the data submitted by the distribution companies is significantly fudged.

Accordingly, Nepra took serious actions and legal proceedings against Pesco, Iesco, Mepco and K-Electric were initiated due to non-compliance with Performance Standards and Codes of Conduct, and also due to misreporting of data.

After following whole process including hearing opportunities, Pesco, Iesco and K-Electric were penalized with the fines of Rs06 million, Rs04 million and Rs03 million respectively. Whereas, proceedings against Mepco are ongoing.

Previously in the FY 2017-18, Lesco, Fesco, Gepco were penalized with the fine amounts of Rs04 million each. Moreover, Sepco and Hesco were also penalized with the fines of Rs06 million and Rs05 million respectively. Therefore, this year Nepra has also decided to abandon the exercise of Performance Ranking of distribution companies till the time, reliable data is received.

Discos have no concept of computerized database system, which is necessary requirement of Performance Standards (Distribution) Rules, 2005. Performance of distribution companies throughout this period does not meet the objectives of power sector reforms.

The regulator has observed that under the given scenario the existing set up would not be able to deliver, therefore, it is recommended that structural changes such as independence of Discos with complete financial controls may be given due consideration to save the sector.

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