Transmission issues: Power companies blamed for Rs90b electricity losses

Wapda says the basic issue of majority power distribution companies is poor governance and limited accountability.

Zafar Bhutta January 23, 2012


The Water and Power Development Authority (Wapda) has held the board of directors of power distribution companies responsible for failing to improve the distribution system, which is incurring losses of more than Rs90 billion annually and spiralling the circular debt to record levels.

In a report submitted to the energy committee formed by the prime minister, a copy of which is available with The Express Tribune, Wapda says that the basic issue of majority power distribution companies (Discos) is poor governance and limited accountability.

Hyderabad Electric Supply Company, Peshawar Electric Supply Company, Quetta Electric Supply Company and Multan Electric Supply Company collectively are losing power worth Rs90 billion annually in the distribution system. These companies are not even managing to post a revenue of Rs90 billion in a year, says the report.

There should be no political and administrative interferences in Discos, says the report. Poor maintenance by former Wapda operated power generation companies are producing almost 6 billion less units per annum than the optimum level.

Wapda recommends that provincial government representatives should be included on the boards of power distribution companies to share the responsibility and be administratively more involved in controlling line losses along with improving revenue recovery. It also proposed to lease out inefficient feeders of power distribution companies to ensure better bill collection and delivery of services.

Wapda further suggested that keeping in mind that tariffs are already at a high level, the revenue gap should be covered through improving inefficiencies. Owing to dismal efficiency level, generation companies are burning additional fuel worth Rs11 billion per year, a cost that can be saved if optimum efficiency level is obtained, report adds.

Power generation companies should be leased out or listed on stock exchanges and its industrial consumption should be preferred, report adds.

The National Transmission and Despatch Company (NTDC) is losing power worth Rs6 billion annually in transmission, more than the normal standards.

These are the real reasons of existing circular debt which has paralysed the national economy and made life difficult for the common man, the report says.

According to the report, Wapda’s hydel power is the worst affected due to inefficiencies of power distribution companies and getting collecting merely 55 per cent of its billed amount even after selling it at Rs1.03 per unit.

Wapda also noted that the energy generation mix was equally divided 50-50 between thermal and hydel, but in 2010 hydel’s share dropped to 32 per cent while share of thermal generation increased to 68 per cent.

In year 2010-11, hydel power cost in public sector was Rs 1.54 per unit, Rs8.74 per unit cost of electricity by public sector thermal plants, Rs 9.07 per unit by Independent Power Producers and Rs31 per unit cost of power by rental power plants.

Published in The Express Tribune, January 24th, 2012.

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