Loss-making Discos: FD opposes PD’s proposal


ISLAMABAD: The Finance Division has reportedly opposed a proposal of the Power Division regarding establishment of Performance Management Units (PMUs) in loss-making power Distribution Companies (Discos) under senior army officers (brigadiers), arguing it will further deteriorate governance within Discos, sources close to Secretary Finance told Business Recorder.

The Power Division prepared a secret proposal for the federal cabinet to hand over affairs of loss-making Discos aimed at putting pressure on existing manpower to work efficiently with proper monitoring of their financial integrity.

The proposal in the form of a summary had been shared with the concerned Ministries/Divisions for comments prior to placing it before the Cabinet for consideration.

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Finance Division, in its comments on Ministry of Energy’s (Power Division) Office Memorandum of November 10, 2023 stated that the proposal contained in the draft summary for the Federal Cabinet regarding establishing of performance Management Units headed by a BS-20 officer of Pakistan Army and manned by officers from Pakistan Administrative Service (PAS), Federal Investigation Agency (FIA) and intelligence agencies has not been endorsed, the sources added.

Finance Division, sources said, has opposed the proposal on the following ground: Special Investment Facilitation Council (SIFC) had decided that an Anti-Theft Task Force will be attached with Discos, starting with Hyderabad Electric Supply Company (HESCO).

According to sources, Finance Division maintains that there was no decision relating to establishment of a Performance Management Unit.

Finance Division, in its comments argued that theft control and performance Management are two entirely different functions, adding that Terms of Reference (ToRs) and Key Performance Indicators (KPIs)s of the proposed PMU have not been indicated.

Finance Division further asked Power Division to provide ToRs for comment on the remit. Finance Division has maintained that in its proposed form, the PMU will render the formal management of the company irrelevant and further deteriorate governance within Discos, suggesting that the scope of the new Unit should be strictly limited to anti-theft measures and recovery of bills.

The proposal will entail additional costs for the companies who are already making losses, the sources quoted Finance Division as saying in its comments, sent with approval of the Finance Secretary, who is an officer of PAS, erstwhile District Management Group.

Power Division recently removed the acting Chief Executive Officer (CEO) of HESCO and assigned four senior officers from Faisalabad Electric Supply Company (FESCO) including the CEO to take ahead anti-theft and recovery drive, which is progressing at a snail’s pace.

According to NEPRA’s 2021-22 Performance Evaluation Report, PESCO, QESCO, SEPCO and HESCO are far away from the targets set by NEPRA and largely contributed in its overall loss of Rs. 122 billion to be borne by the national exchequer.

PESCO’s share is the highest among all DISCOs followed by HESCO in this regard. HESCO and SEPCO’s performance was average, in the middle somewhere, compared to the target of 100%.

QESCO’s performance has been pointed out as worst in this regard with recovery of 35% only. Due to low collection of revenues by some of the DISCOs, the national exchequer bore a total financial loss of around Rs. 170 billion.

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