- Current defaulters owe Rs1,094tr to nightclubs.
- Companies adding 50 billion rupees per month to circularize the debt.
- 10 to 15% recovery achieved via overcharging each year.
ISLAMABAD: Amid the government’s efforts to improve the country’s economic indicators, it has been revealed that electricity distribution companies (discoms) cause an addition of over Rs600 billion in circular debt every year, News reported Monday.
The circular debt has now increased to Rs 2,467 billion, showing that the government has failed to stop losses due to power harvesting and theft.
This means that nightclubs are adding Rs 50 billion per month to the circular debt despite recovery demands exceeding 92.44%.
“In the recovery of electricity billed to consumers, the Discos achieve a recovery of 10 to 15% each year through overbilling, which shows an improvement in the overall recovery,” the official in charge of the Discos affair.
More importantly, discoms have also failed to recover their dues from private and public sector consumers, which have now increased by 69.64 per cent to Rs 2,017,000 from the receivables of Rs 1,189,000 in 2021.
However, the total dues of nightclubs are 16.79% higher than the debts of Rs 1,727 billion in 2023, which is a little more than the circular debt of Rs 467 billion.
So much so that common defaulters, who mainly include prominent political and industrial figures, owe Discos Rs1,094tr.
Unpaid bills from defaulters continue to put immense pressure on the system. The amount the system has to recover from outstanding defaulters increased by Rs 194 billion to Rs 1.094 billion in 2023-24, compared to outstanding defaulters of Rs 900.82 billion in FY 2022-23 . This aspect itself describes the performance of nightclubs and also raises concerns about the turnaround undertaken during the financial year.
If the nightclubs manage to materialize their dues to more than 50%, the system can breathe a sigh and this would improve the liquidity of the nightclubs enough to pay the power plant amounts and discharge other debts, but again, the main Decision makers perched in the Power Division are not paying attention to this chronic problem.
According to the latest data, consumers of profit-making discoms have also received Rs 125.78 billion so far in the current FY25 to provide cross-subsidies to consumers of loss-making distribution companies to ensure a uniform price throughout the country.
Data compiled by the National Electric Power Regulatory Authority (Nepra) shows that consumers of the Lahore Electric Supply Company (Lesco) paid a cross subsidy of Rs65.8 billion to consumers of loss-making nightclubs through the through a tariff rationalization surcharge (TRS).
Similarly, consumers of Gujranwala Electric Power Company (Gepco) paid Rs 14.17 billion, Lesco consumers paid Rs 39.53 billion and Multan Electric Power Company (Mepco) consumers paid Rs 6.19 billion as a cross-subsidy, but no visible, result-oriented and sustainable effort has been initiated in decades to improve loss-making nightclubs. However, federal government policymakers continued to punish legitimate consumers for the inefficiency of loss-making nightclubs.
During the financial year 2023-24, due to T&D losses across all nightclubs exceeding the levels approved by the regulator, the sector faced an additional financial burden of around Rs 276.35 billion. Additionally, shortfalls in collection of billed amounts added Rs 314.506 billion to the circular debt.