MEPCO outperforms DISCOs in achieving recovery target in 2018-19: Nepra

LAHORE: The Multan Electric Power Company (MEPCO) remained very close to its recovery target, followed by Gujranwala Electric Power Company (GEPCO) and Lahore Electric Supply Company (LESCO) by showing their recoveries as 99.8 percent, 98 percent and 97.67 percent respectively during 2018-19, said Performance Evaluation Report of National Electric Power Regulatory Authority (NEPRA) for the fiscal year 2018-19. However, none of the DISCO has achieved the milestone of 100 percent recovery.

According to details, against a target of 100 percent, the actual recovery of Peshawar Electric Supply Company (PESCO) stood at 88.6 percent, followed by Islamabad Electric Supply Company (IESCO) 88.0 percent, Gujranwala Electric Power Company (GEPCO) 98 percent, Faisalabad Electric Supply Company (FESCO) 91.03 percent, Lahore Electric Supply Company (LESCO) 97.67 percent, Multan Electric Supply Company (MEPCO) 99.80 percent, Quetta Electric Supply Company (QESCO) 24.4 percent, Sukkur Electric Power Company (SEPCO) 63.9 percent, Hyderabad Electric Supply Company (HESCO) 74.5 percent and K-Electric 92.6 percent respectively. The average recovery of all the distribution companies (DISCOs) remained 89.26 percent during 2018-19.

It is noted with concern that QESCO has performed abnormally low and has achieved only 24.4 percent recovery. SEPCO and HESCO also performed poorly and need to improve their recoveries. Overall weighted average of 89.26 percent recovery has been achieved by DISCOs against 100 percent.

The loss of revenue which was not recovered by the distribution companies due to their inefficiency stood at a total loss of Rs 171.5 billion, which was borne by the national exchequer in FY 2018-19. QESCO’s share seems very high i.e. more than Rs 57 billion as it has performed very badly in FY 2018-19.

It is surprisingly noted that after QESCO, IESCO is the second largest contributor in this huge revenue loss i.e. more than Rs 20 billion. Further, it is observed that FESCO and K-Electric have also lost significant revenues i.e. more than Rs 15 billion.

Power sector expert Muhammad Khalid has termed it very alarming, saying that it is one of the main reasons of continuous growing circular debt in Pakistan. He said the DISCOs would have to realize that collection of maximum revenues is the only reason to maintain their financial health. The same can also play an effective role in reducing their burden of circular debt, he added.

It is relevant to state that 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.

It may be noted that recovery has a key role for the financial health of distribution companies. Considering its importance, NEPRA has made this parameter an essential component for DISCO’s performance criteria. DISCOs are encouraged to achieve the rate of 100 percent recovery.

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