Islamabad: Pakistan’s public-sector power distribution companies (DISCOs) continued to fall short of key performance benchmarks in FY2024–25, with excessive transmission and distribution (T&D) losses and weak recoveries imposing a combined financial burden of nearly Rs397 billion, according to the State of Industry Report 2025 issued by the National Electric Power Regulatory Authority (NEPRA).
NEPRA data showed that average T&D losses stood at 17.55 per cent, significantly above the allowed benchmark of 11.43pc, resulting in unrecovered losses estimated at Rs265bn. Despite repeated regulatory targets, most DISCOs failed to curb losses due to persistent inefficiencies, outdated infrastructure and weak enforcement against theft.
Recovery performance also remained below expectations, with an average recovery rate of 96.62pc against the allowed 100pc. This shortfall translated into an additional financial impact of about Rs132.46bn. Several utilities reported alarmingly low recovery ratios, with some falling below 40pc, highlighting chronic weaknesses in billing, collection systems and governance.
The regulator attributed these shortcomings to practices such as incorrect meter readings, excessive detection billing and issuance of bills to inactive or government accounts that are unlikely to be settled. Such measures inflated receivables without improving actual cash recovery, intensifying financial stress across the power supply chain.
NEPRA noted that the persistent underperformance of public-sector DISCOs remained a major contributor to circular debt. While the overall stock of circular debt declined in FY25 after exceeding Rs2.39 trillion a year earlier, the reduction was largely driven by fiscal interventions rather than operational improvements, with public-sector DISCOs continuing to dominate the problem.
In contrast, K-Electric (KE), the country’s only privatised distribution utility, did not add to circular debt during the year. NEPRA observed that KE absorbed the financial impact of higher losses and lower recoveries internally, although its consumers still paid the Debt Servicing Surcharge (DSS), under which Rs35.76bn was collected on behalf of the federal government.
Operational challenges were also evident in workplace safety, with 123 fatal accidents reported across DISCOs and KE during FY25, compared to 146 the previous year. NEPRA said each fatality underscored serious lapses in safety practices, particularly in public-sector utilities.
Consumer service delivery remained under strain, as NEPRA received over 96,000 complaints nationwide during the year, most of them linked to public-sector DISCOs and involving billing disputes, delayed connections and poor service quality.
Concluding its assessment, NEPRA observed that nearly three decades after unbundling, most DISCOs remain government-owned, administratively controlled and financially fragile. Without meaningful structural and governance reforms, the regulator warned, circular debt will continue to be passed on to consumers through higher tariffs and increased fiscal support.
