Power sector shows recovery, cuts losses by Rs69bn in Q1

ISLAMABAD: Pakistan’s state-run Power Distribution Companies (Discos) have demonstrated significant improvement in their performance during the first quarter (July-September) of the current fiscal year, reducing their losses by Rs69 billion and improving bill collections by seven percentage points to 91 percent.

In addition, the growth of circular debt has slowed considerably, increasing by only Rs11 billion between July and October, compared to a staggering Rs301 billion during the same period last year. This shift signals better financial management in the power sector, the Power Division on Wednesday said.

During the 2023-24 fiscal year, the Discos incurred a loss of Rs591 billion, largely due to high line losses and unpaid bills. However, the first quarter of fiscal year 2024-25 has shown a notable turnaround, raising hopes for a more stable energy sector.

This improvement is largely attributed to the restructuring of DISCOs, with new heads and boards appointed in June 2024. The previous boards, including independent directors and chairmen, were dissolved due to poor performance against Key Performance Indicators (KPIs) outlined in their performance agreements.

According to the Power Division, the loss for Discos in the first quarter of fiscal year 2024-25 decreased to Rs239 billion, down from Rs308 billion during the same period last year, marking an improvement of Rs69 billion. This improvement reflects better operational performance, particularly in the recovery of unpaid bills. The recovery rate for bills has risen to 91 percent in the first three months of the current fiscal year, up from 84 percent in the previous year. This increase highlights significant progress in the collection of dues.

Circular debt growth, a longstanding issue in the energy sector, has also seen a dramatic shift. During the first four months of the previous fiscal year, the increase in circular debt was Rs301 billion. This year, the rise is limited to only Rs11 billion, signaling better financial oversight and management.