NEPRA reports grim and dark situation on circular debt

Published: August 30, 2018
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Losses to the exchequer and addition of debt could be higher than the one reported for the year under review, as the regulator over a dozen times has shown mistrust on the accuracy of the data the transmission and distribution companies have submitted.

PHOTO:FILE

Losses to the exchequer and addition of debt could be higher than the one reported for the year under review, as the regulator over a dozen times has shown mistrust on the accuracy of the data the transmission and distribution companies have submitted. PHOTO:FILE

KARACHI: While the new government has inherited a massive circular debt of over Rs1 trillion in the energy sector, the power regulator has increased its woes by reporting that the transmission and distribution companies have continued to fail in controlling line losses, which remains a primary cause of the debt.

The national exchequer has suffered a loss of Rs111 billion on account of line losses and non-recovery of monthly bills of up to 100%. “Such losses are playing a primary role in the creation of circular debt,” stated National Electric Power Regulatory Authority (Nepra) in its performance evaluation report on distribution companies and K-Electric for FY2016-17. Nepra published the annual evaluation report on a day the Economic Coordination Committee (ECC) of the Cabinet said it has identified five to six key areas that account for the piling debt, currently standing at Rs1.19 trillion.

Losses to the exchequer and addition of debt could be higher than the one reported for the year under review, as the regulator over a dozen times has shown mistrust on the accuracy of the data the transmission and distribution companies have submitted.

Nepra, however, used the “fudged” data to calculate the losses and evaluate performance in other categories like bill recovery, 147 staffers and citizens’ casualties due to electrocution in the year, quality of voltage, number of complaints and new connections for consumers.

Giving the breakup of Rs111 billion, Nepra reported the line (transmission and distribution) losses stood at Rs35 billion, while non-recovery of revenue accounted for a loss of Rs76 billion in the year.

The power regulator, citing the “fake” data, has reported that all the 10 distribution companies, including K-Electric, have recovered up to 26% line losses from consumers as they are allowed to do so in the tariff.

However, nine out of 10 companies have reportedly incurred higher losses (additional up to 10.3%) than the one allowed in the tariff, as additional losses cause creation of circular debt.

The loss of revenue was incurred due to poor management of the distribution companies and KE. “It is also observed that IESCO, Lesco and Sepco did not incur loss under this head during the year 2016-17,” it said.

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Power outages, complaints

Distribution companies and K-Electric have reported load-shedding in the range of two to four and a half hours every day, which is contrary to ground realities. “For instance, Sepco submitted only 2.2 hours of load shedding in its territory in 2016-17 on daily basis. Similarly, Lesco reported that it carried out averagely two hours of load shedding on daily basis, which is not a factual position.”

“Nepra team, during its visit to different distribution companies, observed load shedding of eight to 10 hours in urban and 10 to 12 hours in rural areas on certain feeders,” it said.

The regulator also found data, regarding average number of complaints per day, for every complaint centre, by distribution companies and K-Electric incorrect. “Keeping in view the worked out results, it is commented that the data submitted by distribution companies and K-Electric is not based on reality.

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“Particularly in the case of Mepco and Sepco, these companies have received less than one complaint per day on average in 2016-17, which is very surprising given the millions of consumers. Further, IESCO, Qesco and Hesco have also reported one to two average complaints per day, for every complaint centre, which does not make sense,” it said.

“It is important to mention here that the Nepra team visited a number of complaint centres in different distribution companies in 2016 and 2017 and found 20 to 30 average per-day complaints in each of the visited complaint centres. Hence, it can be concluded that the data submitted by distribution companies is not based on facts,” it added.

A total of 147 fatalities took place in all distribution companies in 2016-17. The breakup of data reveals that 83 of these were employees and 64 were general public. 

Published in The Express Tribune, August 30th, 2018.

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