FY17 and FY18: Audit reveals Rs143b loss suffered by four power firms
Poor bill recoveries and electricity theft cause revenue leakage
Poor bill recoveries and electricity theft cause revenue leakage. PHOTO: REUTERS
ISLAMABAD:
The Auditor General of Pakistan (AGP) has unearthed a loss of Rs143 billion suffered by four power distribution companies due to poor recovery of electricity bills and lack of action against power theft over the past two years.
In that regard, the AGP presented a report on the financial and operational audit of high loss-making Peshawar Electric Supply Company (Pesco), Hyderabad Electric Supply Company (Hesco), Sukkur Electric Power Company (Sepco) and Quetta Electric Supply Company (Qesco) for financial years 2016-17 and 2017-18 to the Economic Coordination Committee (ECC) of the cabinet.
The meeting was told that in compliance with the ECC decision taken on September 7, 2018, the director general audit (power) conducted the audit of the loss-incurring four distribution companies.
Power firms to recover Rs140b to offset support package cost
During the exercise, the auditors examined financial rules, operational procedures and internal control systems of the distribution companies. In addition to that, they assessed whether the management complied with applicable laws, rules and regulations while running the companies. The purpose of the report was to highlight the weak areas, which were driving down financial and operational performance of the distribution companies.
In 2016-17 and 2017-18, they posted a cumulative loss of Rs143 billion, of which the loss stood at Rs75.6 billion in 2016-17 and Rs67.47 billion in 2017-18. Pesco suffered a loss of Rs51 billion, Hesco Rs49.7 billion, Sepco Rs19.66 billion and Qesco Rs22.1 billion in the two years under review.
The audit found a gap between the cost and sale price of electricity. Similarly, the recovery of electricity bills was quite poor. Hefty trade debts of Rs179.6 billion and Rs256.4 billion piled up in financial years 2016-17 and 2017-18 respectively.
Circular debt – solution lies in removing cost-tariff deficit
Pesco and Sepco wrote off Rs39.42 billion worth of bad debts. Total receivables of these companies stood at Rs507.7 billion on June 30, 2018. About the loss caused by power theft, the ECC meeting was informed that the revenue leakage from illegal connections (kundas), other means and lack of interest in following theft cases came in at Rs1,577 million.
In areas covered by Qesco, a loss to the tune of Rs262 million occurred due to damage to transformers and other electrical equipment.
Line losses were Rs46 billion. Losses on independent feeders of the distribution companies were beyond the permissible limit of Rs351 million. Apart from that, excess operational and maintenance expenditures beyond the target set by the National Electric Power Regulatory Authority (Nepra) were found in the distribution companies.
The ECC decided to discuss the report with heads of the four distribution companies.
Published in The Express Tribune, October 30th, 2018.
The Auditor General of Pakistan (AGP) has unearthed a loss of Rs143 billion suffered by four power distribution companies due to poor recovery of electricity bills and lack of action against power theft over the past two years.
In that regard, the AGP presented a report on the financial and operational audit of high loss-making Peshawar Electric Supply Company (Pesco), Hyderabad Electric Supply Company (Hesco), Sukkur Electric Power Company (Sepco) and Quetta Electric Supply Company (Qesco) for financial years 2016-17 and 2017-18 to the Economic Coordination Committee (ECC) of the cabinet.
The meeting was told that in compliance with the ECC decision taken on September 7, 2018, the director general audit (power) conducted the audit of the loss-incurring four distribution companies.
Power firms to recover Rs140b to offset support package cost
During the exercise, the auditors examined financial rules, operational procedures and internal control systems of the distribution companies. In addition to that, they assessed whether the management complied with applicable laws, rules and regulations while running the companies. The purpose of the report was to highlight the weak areas, which were driving down financial and operational performance of the distribution companies.
In 2016-17 and 2017-18, they posted a cumulative loss of Rs143 billion, of which the loss stood at Rs75.6 billion in 2016-17 and Rs67.47 billion in 2017-18. Pesco suffered a loss of Rs51 billion, Hesco Rs49.7 billion, Sepco Rs19.66 billion and Qesco Rs22.1 billion in the two years under review.
The audit found a gap between the cost and sale price of electricity. Similarly, the recovery of electricity bills was quite poor. Hefty trade debts of Rs179.6 billion and Rs256.4 billion piled up in financial years 2016-17 and 2017-18 respectively.
Circular debt – solution lies in removing cost-tariff deficit
Pesco and Sepco wrote off Rs39.42 billion worth of bad debts. Total receivables of these companies stood at Rs507.7 billion on June 30, 2018. About the loss caused by power theft, the ECC meeting was informed that the revenue leakage from illegal connections (kundas), other means and lack of interest in following theft cases came in at Rs1,577 million.
In areas covered by Qesco, a loss to the tune of Rs262 million occurred due to damage to transformers and other electrical equipment.
Line losses were Rs46 billion. Losses on independent feeders of the distribution companies were beyond the permissible limit of Rs351 million. Apart from that, excess operational and maintenance expenditures beyond the target set by the National Electric Power Regulatory Authority (Nepra) were found in the distribution companies.
The ECC decided to discuss the report with heads of the four distribution companies.
Published in The Express Tribune, October 30th, 2018.