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Express Tribune
14-05-2025
- Business
- Express Tribune
DISCOs fail to slash losses
The boards of all DISCOs have been reconstituted, except for Sepco and Hesco, where the process is being finalised. The boards are structured to ensure enhanced corporate governance, strategic oversight and operational efficiency. photo: file Listen to article Pakistan's economic managers have expressed serious concerns over the newly appointed boards of power distribution companies (DISCOs), which have failed to meet loss reduction targets. The Economic Coordination Committee (ECC), in a recent meeting, voiced grave concern that the targets assigned to DISCOs regarding reduction in transmission and distribution (T&D) losses had not been met. Specifically, the ECC members noted that the losses of Lahore Electric Supply Company (Lesco) had increased over the year. They stressed the need to adopt a robust plan to reverse the trend. The members of the economic decision-making body also underlined the need to make interventions to improve operations of the public power utility and slash losses. During discussions, the ECC was informed that boards of directors of all DISCOs, except for Hyderabad Electric Supply Company (Hesco) and Sukkur Electric Power Company (Sepco), had been reconstituted. It was also noted that under the oversight of the newly reconstituted boards, the entities had shown signs of improvement. The ECC was informed that Pakistan Power Management Company (PPMC), being the technical arm of the Power Division, was regularly monitoring the performance of DISCOs. In line with the National Electricity Policy, strategic roadmaps were formulated and signed in February 2025 by the respective chairpersons of the boards and the CEOs of all DISCOs. These roadmaps outline plans for T&D/AT&C (aggregate commercial and technical) loss reduction, bill collection, theft prevention, load-shedding management, consumer services, safety compliance, Scada implementation, GIS mapping, ERP system automation, computerised energy audits up to the distribution transformer level, execution of service-level agreements (SLAs) and operation and maintenance (O&M) framework. The Power Division briefed the meeting that to accomplish those objectives, a structured action matrix has been developed by DISCOs. This covers key initiatives such as feeder rehabilitation, distribution transformer addition/ augmentation, grid station expansion, capacitor installation, HT and LT line additions, transmission line upgrades, aerial bundled cable (ABC) deployment and advanced metering infrastructure (AMI) installation. In light of the directive issued in the ECC meeting held on April 11, 2024, the status regarding the governance of all DISCOs whose boards had been reconstituted, with a view to improving governance, was submitted to the ECC in the form of a summary under Rule 18(1) read with Rule 23(4) of the Rules of Business, 1973. Eleven DISCOs operate under the administrative control of the Power Division and are governed by the provisions of the State-Owned Enterprises (Governance and Operations) Act, 2023 and the State-Owned Enterprises (Operations and Management) Policy, 2023. The matters of boards of directors are also governed under the aforementioned law and policy. The boards of Faisalabad Electric Supply Company (Fesco), Islamabad Electric Supply Company (Iesco), Lesco, Multan Electric Power Company (Mepco) and Hazara Electric Supply Company (Hazeco) were reconstituted on July 24, 2024. Moreover, the boards of Gujranwala Electric Power Company (Gepco), Peshawar Electric Supply Company (Pesco), Quetta Electric Supply Company (Qesco) and Tribal Areas Electric Supply Company (Tesco) were reconstituted on August 31, 2024. Summaries for the reconstitution of Hesco and Sepco boards, with appropriate representation of independent and ex-officio directors as per relevant provisions of the State-Owned Enterprises (Governance and Operations) Act, 2023 and State-Owned Enterprises (Operations and Management) Policy, 2023, were submitted to the Prime Minister's Office. The boards of all DISCOs have been reconstituted, except for Sepco and Hesco, where the process is in the finalisation stage. The reconstituted boards are structured to ensure enhanced corporate governance, strategic oversight and operational efficiency. PPMC has implemented a monthly performance monitoring mechanism for all DISCOs, evaluating key operational, commercial and financial parameters. This framework ensures accountability and alignment with the sector's strategic goals.
Business Recorder
05-05-2025
- Business
- Business Recorder
Electricity market under CTBCM: Power Div invites comments from stakeholders
ISLAMABAD: The Power Division has invited comments from stakeholders on the country's electricity market under the Competitive Trading Bilateral Contract Market (CTBCM) of National Electricity Plan (NEP) meant to commence with an initial allocation of 800-MW electricity for five years, subject to revision based on market response. In a communication to stakeholders, the Power Division circulated proposed amendments to Strategic Directive #87 of the National Electricity Plan 2023–27. Feedback on these amendments is being solicited by May 18, 2025. According to the Power Division, the proposed changes align with Clause 5.5.2 (g) of the National Electricity Policy, 2021, which mandates the government to make decisions regarding the recovery of costs arising from open access and market liberalisation. The amendments aim to empower the federal government to set up a framework for managing such cost recoveries, particularly in relation to stranded costs. Transmission and CTBCM: IMF asks PD for efficiency boost in Discos The Division notes that market liberalisation and disruptive technological innovations present substantial challenges in recovering the costs of existing generation assets. It emphasises the need for an appropriate mechanism that balances financial viability, affordability, and competition to ensure a sustainable transition for the electricity sector. Power Division, in its proposal has stated that open access charge shall be recovered from all consumers, opting for open access, through competitive suppliers till the currency of this NE-Plan or as amended by the Government, as per the following mechanism: (i) Grid charges, including use of transmission and distribution system charges, Market and system operator fee, cross subsidy charges, metering service charges; etc., shall be applicable to all such consumers; (ii) cost arising on account of open access, comprising of capacity costs, shall be applicable to all such consumers. Provided further, in case the government decides to reduce the open access charges or any of its components for the consumers opting for open access, it shall provide the funding to bridge the differential costs. While taking any such decision, the Ministry of Finance shall hire a third party consultant to evaluate and verify the impact of such change on the national exchequer and consumers of suppliers of last resort. The reduction or removal of such charges shall only be approved where fiscal space is available in the budget to support such reduction and consumers of suppliers of last resort are not burdened with these charges. Power Division has sought comments from stakeholders that if the directive 87 shall be deleted and replaced with open access charge shall be recovered as per the following mechanism: (i) Grid charges, including use of transmission and distribution system charges, Market and system operator fee, cross subsidy charges, metering service charges; etc., shall be recovered from all consumers, opting for open access, till the currency of this NE-Plan or as amended by the Government; (ii) The federal government shall provide the frameworks or policy guidelines, from time to time, stipulating the mechanism for recovery of the stranded costs on account of market liberalisation and open access. These frameworks/ policy guidelines shall reflect market realities and include measures/ incentives to facilitate open access/ wheeling of allocated quantum of capacity for a given period, introduce competition and transparency in the market and such other matters as it deems necessary to safeguard consumer interests and advance the economic and social policy objectives of the Federal Government. Provided that the quantum of capacity for first five years after issuance of the first framework shall be 800MW to be allocated in a competitive and transparent manner, which the federal government may revise keeping in view the market realities and need for further liberalisation. Provided further that, where no such frameworks or policy guidelines is applicable, such stranded costs shall be paid by all bulk power consumers of a competitive supplier and the amount of such stranded costs shall be the same as the total generation capacity charges recovered from the equally placed bulk power consumers of the suppliers of last resort either in a volumetric form (kWh) or through fixed charges and such charges shall continue to be paid in the said manner till such time as may be reviewed by the Federal Government as per the procedure laid down in the applicable policy and regulatory framework. However, Korangi Association of Trade & Industry (KATI) in its comments has opposed recovery of stranded costs from the competitive market participants arguing that his retroactive imposition contradicts fundamental principles of open access and economic dispatch. Bulk power consumers opting for competitive supply should not bear the cost burden of excess generation contracted by legacy utilities under take-or-pay PPAs. Such a provision dis-incentivizes migration to the competitive market, discredits investment confidence, and distorts price signals. The appropriate mechanisms for managing legacy stranded capacity include :( i) market-based capacity auctions; ii) ancillary service procurement from idle capacity and; iii) integration via balancing and reserve markets governed under the Commercial Code. The Association has also opposed the inclusion of hybrid bulk power consumers (those sourcing simultaneously from the Supplier of Last Resort and Competitive Suppliers) in the early phase of CTBCM. Without ring-fenced metering, enforceable capacity allocation, and standby cost attribution, such dual sourcing models will result in: (i) load forecasting errors and grid planning inefficiencies; ii) free-riding behaviour by hedging via SoLR; and (iii) imbalance settlements skewed against full competitive participants. The Association has strongly supported inclusion of Discos and K-Electric as competitive suppliers and dual tariff model for industrial consumers and enforcement of inverter compliance with IEEE/ Nepra Grid Codes, keeping in view the recent blackouts in Spain and Portugal. Copyright Business Recorder, 2025
