- The recent report of the Ministry of Finance highlights the management of the power sector.
- Discos are faced with high -risk factors contributing to operational ineffectiveness.
- Debt motivated by the inability of nightclubs to recover consumer income.
Islamabad: Pakistan electricity distribution companies (Disco) are faced with a financial crisis, hemorragizing about 1 billion dollars per year due to line, theft and ineffectiveness loss, The news reported Thursday.
A recent report from the Ministry of Finance, prepared to meet the requirements of the International Monetary Fund (IMF), underlined the Drait desire of nightclubs while they are faced with a confluence of high -risk factors which contribute to operational ineffectiveness and to an rooted circular debt problem.
These distribution companies include Islamabad Electric Supply Company (IESCO), Lahore Electric Supply Company (Lesco), Multan Electric Power Company (Mesco), Hyderabad Electric Supply Company (Hesco), Gujranwala Electric Power Company (GHACO), Quetta Electric Supply Company (Qesco), and Peshawar Electric Supply Company (Pesco).
This debt is largely driven by the inability of discos to recover sufficient income from consumers to cover the costs of production and distribution of electricity.
Mediocre collection rates, high transmission and distribution losses, delayed government grants and unrevised tariff adjustments create a financial tension cycle.
According to the report, this circular debt ultimately obstructs the disco capacity to invest in infrastructure, maintain equipment and improve operational efficiency, perpetuating a cycle of ineffectiveness and financial instability.
The heart of these challenges is the high levels of operational risk and credit inherent in the business model of Discos.
Operational ineffectiveness, such as obsolete infrastructure, high distribution losses and generalized theft, amplify the financial burden, while credit risk results from significant claims, poor recovery rate and delayed government subsidies.
This double threat limits the cash flows necessary for daily operations and essential investments in advanced counting infrastructure (AMI) and system upgrades.
In addition, frequent government interventions and delays in pricing adjustments prevent nightclubs from invoicing the true electricity cost to consumers, expanding the income gap.
Consequently, nightclubs are found in a perpetual cycle of debt and ineffectiveness, which has an impact on their financial stability and threatens the sustainability of the broader energy sector in Pakistan, according to the report.
Several public companies have undergone significant losses during the 2010 financial year.
The largest loss was reported by the National Highway Authority to Rs295.5 billion, followed from QESCO to RS120.4 billion, PESCO RS88.7 billion, Pakistan International Airlines RS3.5 billion, Pakistan Railway Company RS37 billion, Lesco RS34 , 5 billion, Pakistan Steel Mills Corp RS31.1 billion, Hesco RS 22.1 billion, Genco-II RS17.6 billion, IESCO RS15.8 billion, Pak Office of RS13.4 billion, Tesco RS 9.5 billion Rupes GEPCO, 8.5 billion Rupes, Genco-III. And all the others cumulatively RS23.7 billion.
The losses accumulated are at a colossal of 5,748 billion rupees with the majority in the last 10 years only.
The first 15 for -lucrative entities were directed by OGDCL to RS208.9 billion, Pakistan Petroleum limited to RS115.4 billion, National Power Parks at 76.8 billion rupees, Govt Holding PVT Limited at RS69.1 billion, Pak Arab Refinery Company RS55 RS55 .0 Billion, Port Qasim Authority RS41 billion, MEPCO RS31.8 billion, NBP RS27.4 billion, WAPDA RS22.2 billion, KPT RS20.3 billion, PNSC RS20.1 billion, PSO RS19.6 billion, State Life Insurance Corp. RS18.3 billion and PKIC RS15.2 billion respectively.
Grute revenues from public federal companies (SOES) reached 13,524 billion rupees, reflecting an increase of 5.2% in annual shift.
The overall total profits were 820 billion rupees, an increase of 14.61% in annual shift while public loss of loss enterprises declared aggregated losses of 851 billion rupees, a decrease of 14.03% in slipping Annual for the 12 months ending in June 2024.
These losses include government assistance of 782 billion grants of grants and 367 billion rupees of subsidies added to income. In addition, the abolition of PSWF entities Netweed losses after compensation with for -profit entities amounted to 521.5 billion rupees.
The accounting value of assets increased by 6.37% in annual sliding to 38,434 billion rupees, while liabilities increased by 6.7% in annual sliding to reach 32,571 billion rupees, which led to capital Own net of 5,863 billion rupees, an increase of 4.47% in annual sliding. A low available cash flow and a high weighted average cost of capital ranging from 17% to 22% resulted in low equity yield of -0.5% and a return on invested capital of 3.4%.