ISLAMABAD: The government has directed all power distribution companies (Discos) to outsource collection of bills from consumers in areas of high-loss feeders in order to boost recovery.
The government has confirmed to the World Bank, the Asian Development Bank (ADB) and Japan International Cooperation Agency (Jica) that distribution companies had already started tendering out bill collections in high-loss areas to local private parties.
According to a report submitted to the international lending agencies and the Economic Coordination Committee (ECC) of the Cabinet, the Ministry of Water and Power has instructed Pesco, Hesco, Sepco and Mepco — the power companies of Peshawar, Hyderabad, Sukkur and Multan — to outsource collection of their respective feeders with losses of 50 per cent and above.
Zafaryab Khan, a spokesman for the power ministry, said the managements and boards of directors of the Discos were independent to conduct bidding and approve their results based on the lowest collection charges and higher recovery rates.
He said the Discos were required to declare certain feeders with high losses and then give targets to the successful bidders for improved recoveries.
The maximum recovery rate has touched 89pc on average in all distribution companies (other than Karachi’s K-Electric). This means that about 11pc of electricity sold and billed to consumers is never recovered which is once again built into the tariff of honest consumers.
This is on top of the 18pc losses that are made part of the tariff. As a result, the receivables of the Discos have gone beyond Rs570 billion.
The report said the distribution companies had also been instructed to implement revenue protection programme that ensured correct billing and reduced losses, particularly by going after theft. However, the initiative has not been fully implemented so far, mainly because of privatisation programme.
As part of power sector loans under International Monetary Fund (IMF) programme, the three agencies — the World Bank, the ADB and Jica — are required to keep a quarterly check on implementation of Development Policy Credit in the energy sector under a consensus matrix.
As part of the programme, the government has been increasing electricity tariffs on a regular basis since October 2013 to ensure full cost recovery of power sold to the consumers.
On the instructions of the government, the National Electric Power Regulatory Authority (Nepra) has already finalised procedure for multi-year tariff for all distribution companies to ensure predictable revenue stream before being privatised.
The Privatisation Commission has been instructed to sell off all the Discos before Dec 31 this year.
However, the government has not been able to recover stuck-up power sector bills from the provincial governments and public sector agencies.
The Discos have also failed to recover more than Rs370bn from the powerful private consumers, despite the fact that power supply to poor consumers is disconnected if they fail to pay their bills by the due date.
