Engineering Post Report
The federal government has decided in principle to transfer all power distribution companies, DISCOs, to the provinces instead of their privatization in order to reduce burden on the national exchequer.
In this regard, the federal government is involved in the process of consultations at the appropriate level in order to enlist their willingness and support for taking over administrative control of the power distribution companies falling in their jurisdictions.
The persist nt chronic issues of high transmission and distribution losses with an average of 20.34 up to June 2021, low percentage of recovery of outstanding liabilities (mean recovery of as high as 88.51 per cent reported for DISCOs till June 2021 ) and weak governance system have hackled the power distribution of Pakistan.
The unrealistic targets set by the regulator in respect of investments have created an investment gap in the DISCOs and they fail to achieve desired results due to overall governance issues. Quite obviously, consequently the Circular Debt was also building at an increasing and alarming rate and has already reached the level of Rs 2.6 trillion mainly due to electricity theft and low recovery besides other factors. All DISCOs had reported losses amounting to about Rs 300 billion during last financial year. For some time , the federal government has also been exploring possibilities of placement of the independent Board of Directors and option of outsourcing of DISCOs management functions and operations without transferring ownership and also an area franchising structure for improvement in DISCOs efficiency with a clear transaction structure.
As per the latest policy decision taken by the federal government on express direction of the prime minister, 5 DISCOs of Lahore, Faisalabad, Gujranwala, Multan and Islamabad will go to Punjab province , two of Hyderabad and Sukkur to Sindh province, another two DISCOs of Peshawar and Tribal Areas will go to Khyber Pakhtunkhwa (KPK) and one of Quetta to Balochistan province
Even after transferring administrative control of DISCOs to the province in due course of time , the federal government will retain its control over electricity generation and transmission system. The provinces will also be given power to take the decisions for effectively reducing electricity theft, loadshedding schedule and subsidy to the customers in their respective areas.
Distribution companies function under the Pakistan Electric Company (PEPCO) and are responsible for distribution of power to the domestic and other categories of customers in their respective allocated areas.
They buy power from WAPDA, PEPCO and other Independent Power Producers (IPPs) and sell it in their areas. All DISCOs are owned by the federal government except K-Electric (formerly Karachi Electric Supply Corporation (KESC) which was privatized way back in 2005.