Govt to offer reward for DISCOs’ old recoveries
According to the data provided to Nepra, energy generation in June 2021 was recorded at 14,361.17 GWh. PHOTO: FILE
In a major incentive, the government has decided to offer 30% of the total recovery of electricity bills from private-sector defaulters to the employees of power distribution companies (DISCOs) and law enforcement agencies (LEAs).
The objective is to ensure the recovery of electricity bills from chronic private-sector defaulters and to curb electricity theft.
The decision was taken in a recent meeting of the Cabinet Committee on Energy (CCOE), which took up for discussion an incentive mechanism for the recovery of more than two-year-old arrears as well as minimum payment for electricity theft.
The Power Division briefed the cabinet body that 11 DISCOs were functioning under the division, where circular debt had reached Rs2.310 trillion by June 2023 and receivables had piled up to Rs1.786 trillion.
Electricity theft, under-recoveries and losses above the threshold set by the regulator plague almost all DISCOs, which directly contribute to the deteriorating state of affairs of these companies, leading to a bulging circular debt.
In financial year 2023-24, it was apprehended that DISCOs may have booked a huge loss of around Rs589 billion.
In a meeting held on March 29, 2024 regarding power theft and the lack of recovery of arrears, chaired by the prime minister and attended by all provincial chief ministers, it was decided that all-out efforts would be made to curb theft and improve recoveries.
They agreed that the Power Division would finalise an incentive mechanism for the officers of civil administration, police and members of law enforcement agencies, engaged in tackling power theft or the recovery of more than two-year-old arrears.
The Power Division proposed an incentive mechanism in the form of special allowance or bonus, to be decided by the respective boards of companies based on actual recovery.
Approval of the CCOE was requested to authorise the Power Division to convey the incentive mechanism to all DISCOs, as directed by the federal government, in terms of Section 17 of the State-Owned Enterprises (Governance and Operations) Act, 2023.
During the ensuing discussion, the Power Division briefed the CCOE about the types of defaulters. It was mentioned that the incentive money would be transferred to provincial governments for further distribution through the respective chief secretary office.
The cabinet body on energy directed that a proper framework should be established for the distribution of money. It was explained that for private theft detection, the minimum recovery percentage should be reduced from 100% to 80%.
The CCOE approved a summary submitted by the Power Division titled “Incentive Mechanism for Recovery of Electricity Arrears above 2 Years and for Theft of Electricity from Private Consumers” and approved proposals with following modifications.
The proposed incentive shall be enhanced to 30% for the employees of civil administration, police, law enforcement agencies and DISCOs in the category of private running defaulters and private disconnected defaulters. Also, in the case of private theft detection, the minimum recovery percentage should be reduced from 100% to 80%.
The Power Division, with the approval of minister in charge, will issue guidelines for the distribution of incentive money to provincial governments in line with the mechanism approved by the cabinet.