Discos's miraculous second half recovery

Business Recorder

5 days ago

The Ministry of Energy (Power Division) has taken to social media and press briefings with a celebratory tone, touting a dramatic decline in inefficiency losses by discos during FY25 — from Rs591 billion in the previous year to Rs400 billion. A reduction of Rs191 billion is no small feat. But let's not lose sight of the fact that a Rs400 billion loss is still nothing short of catastrophic. It may be a better year, but it's far from a good one.
What truly deserves a double take is what transpired in the second half of FY25. According to the Power Minister, recoveries surged to 96.06 percent for the full year — up from a modest 92.02 percent at the end of December 2024. That's a lot of ground covered in just six months. Some might even call it… magical.
To put things into perspective: at the halfway mark of the fiscal year, discos had billed Rs3.12 trillion and collected Rs2.87 trillion — a shortfall of Rs249 billion. And then, in the remaining six months, they somehow managed to collect Rs117 billion more than what they billed. In other words, the second half of FY25 witnessed over 100 percent recovery. Approximately 3 billion units' worth of 'extra' collection materialized. Remarkable, no?
Of course, consumption patterns, seasonal variations, and tariff structures differ across fiscal halves — that much is fair. But historically, it is the second half that has contributed the lion's share of inefficiency losses — about 60 percent in each of the past two years. That this trend reversed so dramatically in FY25, and with lower effective tariffs in Q4 no less, is a statistical curiosity.
The Minister also claimed the recovery was the highest in history. Not quite. FY21 still holds the title at 97 percent. So while the recovery this year may be impressive, it's not unprecedented. Unless, of course, we're using a new definition of "record-breaking."
Now, if the recovery side of DISCO inefficiencies is truly turning a corner — that would be welcome news. But for now, let's just say we await Nepra's State of Industry Report for a little more. Whenever it arrives.
The second half of the inefficiency equation — Transmission & Distribution (T&D) losses — tells a different story. Here, performance has remained stubbornly poor. The T&D loss rate is still hovering close to 18 percent — miles away from Nepra's target of 11.4 percent. In financial terms, the 'improvement' has been a mere Rs10 billion. Hardly worth framing.
Worse still, the gap between allowed and actual T&D losses is now the widest in recent memory. Over the last seven years, losses have moved within a tight band — and not in a good way. There has been little meaningful progress despite ambitious targets and consistent tariff adjustments.
And let's not forget — these calculations only account for losses above the allowed threshold. The rest are already priced into consumer tariffs. So, every extra percentage point of inefficiency is a direct transfer from taxpayers and bill-payers to system leakage.
In sum: one half of the disco loss problem appears to have undergone a miraculous transformation — or so we're told. The other half continues to underwhelm. Until both parts of the puzzle are fixed — with transparency and structural reform rather than spin — the sector's chronic inefficiencies will remain business as usual.