DISCOs incur Rs45 billion in losses during 2017/18

ISLAMABAD: The state-run power distribution companies (DISCOs) and privatised K-Electric, amassed around Rs45 billion losses in the fiscal year 2017/18, while another Rs78.3 billion were lost to under-recovery, a report by power regulator said.

The National Electric Power Regulatory Authority (NEPRA) in a recently published ‘Performance Evaluation Report of DISCOs for 2017/18’ pointed out that transmission and distribution (T&D) losses piled up due to DISCOs’ inefficiencies and their failure in meeting the targets set by the regulator.

However, among all others Islamabad Electric Supply Company (IESCO) performed comparatively better, the report said.

During the year (FY18) under review, the T&D losses were 28.6 percent higher, compared to Rs35 billion recorded in fiscal year 2016/17, while recovery shortfall reached Rs78.27 billion against Rs76 billion in FY17. The NEPRA, in its report, noted that in spite of persistent directives and monitoring by the regulator, DISCOs did not show any distinguishable performance.

The NEPRA said, “The issue of data authenticity is still a major concern for the regulator as reported in previous performance evaluation reports, and therefore, it has already initiated strict actions in the form of imposing penalties against such incorrect reporting by the distribution companies”.

The Annual Performance Reports (APR) for the year 2017-18, submitted by the distribution licensees, were reviewed on the basis of parameters namely, transmission and distribution losses, recovery, System Average Interruption Frequency Index (SAIFI), System Average Interruption Duration Index (SAIDI), timeframe for new connection, load-shedding, nominal voltage, consumer complaints, safety, and fault rate.

The NEPRA has raised serious reservations over the authenticity of data regarding load-shedding being carried out by distribution companies in their service territories. “The data provided by DISCOs except for GEPCO and QESCO shows that duration of load-shedding remained between 1.26 and 3.25 hours daily. In our opinion, this is not a realistic figure and the duration must be longer than reported,” the regulator said.

Further, it said it was a matter of concern that distribution companies were not following the order of load-shedding according to different categories of consumers as provided in Performance Standards (distribution) PSDR 2005. “It becomes worst when consumers who are already affected due to technical faults/breakdowns have also to bear forced load-shedding,” the regulator said and advised that efforts be made to compensate such consumers.

Except IESCO, all DISCOs have breached the T&D losses targets set by NEPRA, the report said. The IESCO’s target was 9.22 percent which it reduced to 9.13 percent. Furthermore, GEPCO with 10.01 percent against the target of 9.99 percent, FESCO at 10.5 percent against 9.72 percent, and K-Electric at 20.4 percent against 19.8 percent, were close to the targets set by the NEPRA.

On the other hand, performance of PESCO remained the worst with 38.1 percent against the target of 27.62 percent along with HESCO at 29.8 percent against 21.17 percent, SEPCO at 36.7 percent against target of 28.18 percent, QESCO at 22.4 percent against 17.5 percent, and LESCO at 13.8 percent against 11.75 percent. Reduction of these losses is very critical for sound financial health of distribution companies, the regulator said.

In 2016/17, IESCO’s T&D losses were 9.02 percent, PESCO’s 32.6 percent, GEPCO’s 10.24 percent, FESCO’s 10.6 percent, LESCO’s 13.8 percent, MEPCO’s 16.9 percent, QESCO’s 23.1 percent, SEPCO’s 37.8 percent, HESCO’s 30.8 percent, and K-Electric losses were recorded at 21.71 percent.

As far as recovery is concerned, the regulator said DISCOs were encouraged to achieve 100 percent recovery. During 2017/18, MEPCO posted the highest recovery at 99.68 percent (last year 96.21pc) followed by IESCO at 99.1 percent (last year 100.37 percent).

Whereas, QESCO with a recovery of 46.1 percent against 43.5 percent last year) stood lowest among all the DISCOs, while the SEPCO’s recovery remained at 60.1 recovery against 110.8 recovery last year. Other companies that showed good recovery included FESCO which recorded a recovery of 97.93 percent against 97.21 percent last year, LESCO 97.8 percent against 100.45 percent, and GEPCO’s recovery remained 97 percent against 98 percent in the previous year. The K-Electric’s recovery was 91.04 percent against 90.04 a year earlier, PESCO’s was 89.5 percent against 89.1 percent, while HESCO’s recovery was recorded at 76.7 percent against 95.2 percent last year.

During FY18, SEPCO’s recovery drastically reduced to 60.1 percent from 110.8 percent in FY17, HESCO’s recovery came down from 95.2 percent achieved last year to 76.7 percent during the year under review, while LESCO’s recovery slipped to 97.8 percent from 100.45 percent posted in the previous year. However, MEPCO’s recovery increased from last year’s 96.21 percent to 99.68 in the period under review, K-Electric’s increased from earlier 90.04 percent to 91.04 percent and QESCO’s recoveries improved from 43.5 percent to 46.1 percent.

Regarding timeframe for new connections, the regulator noted that the data submitted by companies particularly those who had claimed 100 percent achievement of targets of applied connections did not seem to be based on ground realities as NEPRA’s teams had physically verified that information. According to NEPRA rules, a distribution company shall provide electric power service to at least 95 percent of its new eligible applicants as specified in the Consumer Eligibility Criteria laid down by the authority.

The IESCO, PESCO, QESCO, SEPCO, HESCO, and K-Electric have provided over 95 percent connections to eligible consumers in 2017-18.

In this regard, however, GEPCO’s performance was the worst followed by the FESCO. Further, a slight breach of targets has also been made by LESCO and MEPCO.

The regulator reported that the number of fatal accidents (employees and general public) increased in 2017/18 to 152 against 147 in 2016/17, which was very alarming. “DISCOs have failed to adhere to the safety procedures and develop a safety culture. Fatalities in IESCO, GEPCO, MEPCO, HESCO and K-Electric increased, while in PESCO, FESCO, LESCO, QESCO and SEPCO the incidents reduced,” the authority said.

On the system average interruption frequency index (SAIFI), which is a measure of average number of times a consumer experienced an outage during a year, IESCO, PESCO, FESCO, LESCO, QESCO and K-Electric performed well in comparison with the targets set by the NEPRA. However, GEPCO, MEPCO, SEPCO, and HESCO failed to achieve the targets.

Comparing the data of SAIFI for the year 2017-18 with 2016-17, it has been noted that except PESCO, MEPCO, and GEPCO, all other DISCOs have posted reduction. This means that these three distribution companies (PESCO, MEPCO and GEPCO) failed to provide reliable power supply in 2017-18 as compared to 2016-17.

On load-shedding hours carried out by DISCOs per day, except for GEPCO and QESCO, other DISCOs reported the figures of load-shedding in the range of 1.26 to 3.25 hours, which is contrary to the ground realities, the NEPRA report said.

“For instance, FESCO has submitted that it conducted load-shedding for only 0.74 hours in its territory in 2017-18 on daily basis, similarly, K-Electric has reported averagely 1.26 hours of load-shedding on daily basis, which is not a factual position,” the NEPRA said. It said the NEPRA team, during its visits to different distribution companies had observed load-shedding of 8 to 10 hours in urban and 10 to 12 hours in rural areas on certain feeders. In addition, it has also been observed that distribution companies are not following the order of load shedding, the authority said in its report.