ISLAMABAD: The federal and provincial government as well as private consumers owe Rs 56.6 billion to Hyderabad Electric Company Limited (Hesco), which is already facing financial crunch due to higher than Nepra allowed transmission and distribution losses, less recovery of billed amount and insufficient tariff differential subsidy.

A meeting of the Senate Special Committee on Energy was provided details of Hesco’s financial problems and a copy obtained by Business Recorder revealed that transmission and distribution losses of Hesco are as high as to 29.1 percent. The gap between billed amount and recovery amount stands at Rs 6.4 billion as opposed to Rs 2.6 billion in 2012-13.

Receivables of Hesco against federal government are Rs 2.587 billion and provincial government Rs 1.029 billion while Hesco receivables against private sector stand at Rs 36.166 billion. The receivables of Hesco increased from Rs 49.11 billion in end-June 2017 to Rs 56.688 billion by end-April 2018.

The reasons for increase in receivables and circular debt in respect of Hesco included; (i) the Nepra determined line losses target is unrealistic and not based on ground realities, hence not achieving financial loss; (ii) Hesco is domestic based company, as 873,602 out of total 1,076,405 consumers are of domestic category having 60 percent sales; (iii) the maximum outstanding arrears of private category pertain to domestic consumers, ie, 93.3 percent; (iv) high rate of poverty among domestic consumers is big hurdle; (v) attacks on employees/offices are common due to non-cooperation of law enforcing agencies; (vi) and police do not lodge the FIRs against offences of assault on Hesco teams and stealing of electricity cases. The Hesco referred 954 cases of electricity theft but only 32 FIRs were lodged during July 2017 to April 2018.

The documents also noted that majority of villages, towns and colonies are the defaulters of Hesco, and in case of disconnection of electricity, the defaulters attack Hesco staff and block the highways/roads to create hurdles and law and order situation.

Moreover, in case of disconnection for recovery, consumers connect their installations directly with Hesco distribution system and steal electricity through Kundas (hook system), which causes dual losses to company i.e. theft of electricity and blockage of revenue.

The Hesco has requested the Sindh government for allowing dedicated police stations for curbing theft of electricity and recovery from hard areas in accordance with the rules and to protect Hesco employees during recovery campaign, but the request was not met by the government of Sindh.

The Hesco further pointed out that the provincial government is required to depute ‘Recovery Mukhtiarkars’ for recovery of arrears from disconnected defaulting consumers but its failure in this regard resulted in accumulation of receivables against disconnected defaulters to Rs 21.163 billion.