DISCO losses drain Rs 397b in FY25

Pakistan’s public sector electricity distribution companies continued to miss key performance benchmarks in FY2024-25 as excess transmission and distribution (T&D) losses and recovery shortfalls remained the main sources of financial stress in the electricity supply chain, according to the National Electricity Regulatory Authority (NEPRA) Industry Status Report 2025.

NEPRA data showed that DISCOs recorded average T&D losses of 17.55% during the year, much higher than the permissible limit of 11.43%. The excessive losses created an unrecoverable economic impact estimated at Rs 265 billion. Despite repeated targets and regulatory oversight, most utilities have failed to close the gap. The report highlighted persistent inadequacies, outdated infrastructure and weak enforcement against theft and loss.

Recovery performance also remained below benchmarks. DISCOs achieved an overall recovery rate of 96.62% against the permissible 100%. This resulted in a recovery deficit of around Rs 132.46 billion. Several utilities experienced significantly lower recovery rates, with some falling below 40%. The evidence highlighted long-standing weaknesses in pricing accuracy, collection systems and governance structures.

NEPRA attributed the shortfalls to widespread practices such as incorrect cash counts, excessive debit detection and issuing bills to dormant and government accounts that are unlikely to be settled. These practices inflated claims without generating real cash recoveries, increasing financial pressure across the industry.

The continued underperformance of public sector DISCOs remained a key driver of cyclical debt accumulation. Although the total stock of circular debt declined in FY2024-25 after crossing Rs 2.39 trillion a year earlier, NEPRA observed that the decline was largely a result of fiscal measures and not operational improvements. Public sector distribution companies remained the dominant contributors.

In contrast, K-Electric (KE), the country’s only privatized distribution company, did not add to revolving debt during the period under review. NEPRA noted that KE absorbed the financial impact of higher losses and lower recoveries internally rather than passing them on to the wider electricity market. However, KE consumers continued to pay the Debt Service Surcharge (DSS), under which Rs 35.76 billion was collected on behalf of the federal government.

Operational challenges extended to workplace safety. Fatal accidents at DISCOs and KEs totaled 123 during the year 2024-25, against 146 in the previous year. NEPRA said each death reflected serious deficiencies in safety practices and organizational culture, particularly in public sector utilities.

Customer service performance also remained under pressure. NEPRA received more than 96,000 consumer complaints through its headquarters, regional offices and digital platforms during the year. Public sector DISCOs accounted for most of the outstanding cases, particularly those related to pricing differences, delayed connections and quality of service.

In its assessment of sectoral reforms, NEPRA noted that nearly three decades after bifurcation, most DISCOs remain state-owned, administratively managed and commercially fragile. The regulator concluded that without meaningful structural reforms, cyclical debt will continue to be passed on to consumers through higher tariffs and fiscal support.