According to the ‘State of the Industry Report 2020’, released by the National Electric Power Regulatory Authority (NEPRA) on Tuesday, the circular debt has reached Rs. 2.15 trillion by June 2020.
The last fiscal year saw an increase of more than 30 percent in this debt, up from Rs. 1.6 trillion in June 2019. The report also highlighted Covid-19 as one of the causes that worsened this debt, as the pandemic led to increased electricity theft and non-payment of electricity bills.
The lockdowns also added difficulties to and delayed recoveries of distribution companies (Discos). As per the report, the combined recovery of all power Discos remained at 88.77 percent in the FY20 compared to 90.25 percent in FY19. Receivables from public and private consumers and delayed payments of subsidies are also contributing to an increase in circular debt, the report identified.
Citing the factors adding to the circular debt, NEPRA said that one of the main causes of theft of electricity and non-payment of bills is a higher electricity tariff. This load-shedding policy is causing a decrease in the sale of electricity from the available ‘take or pay’ power plants and thus causing a higher per-unit cost of electricity.
Discos, therefore, need to improve governance and disconnect individual consumers who are either defaulters or involved in electricity theft, rather than observe load-shedding on feeder having high transmission and distribution losses and low recovery, the regulator said.
On the power generation capacity front there has been a net decrease of 276MW, the report said, explaining that the installed power generation capacity of the country as of June 30 was at 38,719MW, compared to 38,995MW on June 30, 2019. Furthermore, transmission and distribution losses of Tribal Areas, Quetta, and Peshawar electricity supply companies increased in comparison with the last year. Meanwhile, the losses at the Islamabad, Gujranwala, Lahore, Faisalabad, Multan, Hyderabad, and Sukkur electric supply companies decreased in comparison with FY19.
The load-shedding policy is compelling consumers to use smaller inefficient gas or diesel generators as well as uninterrupted power supply (UPS) systems, which has disrupted the efficient allocation of valuable resources in the economy.
The distributed generation through solar power solutions has made a significant ingress in the domestic consumer base of Discos which are losing consumers with high consumption and paying capacity. Similarly, commercial, educational and industrial outfits are also inclined to drift away from Discos and opt for self-generation through solar power.