ISLAMABAD: Showing grave concern at the continuous poor performance and data fudging by power Distribution Companies (Discos), National Electric Power Regulatory Authority (Nepra) has recommended their privatisation.
Nepra's report came days after the government decided to give away five loss-making Discos on a performance contract while five Punjab-based profit-making Discos will be given to the private sector on a ten-year Concessional Agreement. The regulator, in its Performance Evaluation Report (PER) of 2019-20 compared data with previous years submitted by the Discos and observed with concern that the companies did not take measures to bring improvement in this critical area.
It was noted with serious concern that during FY 2019- 20, Discos contributed to a loss of around Rs. 59 billion due to their inefficiency in controlling T&D losses and Rs. 160 billion in recoveries. The reported figures of T&D losses indicate that except Gepco and Fesco, none of the other Discos could meet the regulator’s expectations. Most particularly, Qesco, Pesco, Sepco and Hesco showed the worst performance among all Discos in this regard.
None of the Discos could achieve the figure of 100% recovery, however, Lesco, Gepco, Mepco, Fesco, K-Electric and Iesco have shown more than 90 percent recoveries.
The following is the contribution of Discos to T&D losses: (i) Pesco, Rs 22.521 billion; (ii) Iesco, Rs 157.88 million; (iii) Gepco - Rs 880.17 million; (iv) Fesco, Rs - Rs 1.252 billion; (v) Lesco, Rs 5.859 billion; (vi) Mepco, Rs 682.4 million; (vii) Qesco, Rs 10.933 billion; (viii) Sepco, Rs 5.955 billion; (ix) Hesco, Rs 7.915 billion; and (x) K-Electric, Rs 6.938 billion. The rate of recovery of Discos was recorded at 90.98 per cent against 100 per cent benchmark, out of which Pesco remained 12.3 per cent behind the target, Iesco, 9.7 per cent, Gepco 5.6 percent, Fesco 5.8 per cent, Lesco 5.4 per cent, Mepco, 5.8 per cent, Qesco 19.4 per cent, Sepco 43.4 per cent, Hesco 29.9 per cent and K-Electric 7.9 per cent. Thus, the total less recovery was 9.02 per cent vis-a-vis the target.
Regarding a timeframe for new connections, Nepra says that it is alarming that power demand is not being generated despite availability of ample generation in the country and non-provision of new connections to the eligible consumers within the prescribed time-frame is one of the factors contributing to low power demand. The submitted data shows that Gepco, Fesco, Qesco and Sepco failed to provide more than 95% of the applied connections within the time-frame as prescribed in the PSDR 2005. Further, Gepco's performance remained poor in this regard.
The regulator had serious reservations over the authenticity of data regarding load shedding being carried out by Discos in their service territories. Although the duration of load-shedding decreased in FY 2019-20 as compared to previous years, it could have been fully eliminated had Discos availed 100% of their allocated quota of power.
During the reported period, it came to the knowledge of the regulator that Discos are carrying out load management as per AT&C losses criteria. But it is a matter of concern that criteria set by the Discos is not in line with the requirements of Nepra’s performance standards.
Nepra being a regulator vigilantly observes the interests of consumers therefore Discos are being persistently advised to improve their complaint handling mechanism and provide relief to consumers to the maximum level possible. In this regard, Nepra regularly monitors the complaint handling mechanism of distribution companies and issues directions to resolve the consumer complaints in a timely manner. But unfortunately, the regulator's team during visits of different Discos found complaint centers in poor and deteriorated conditions. Further, Nepra has serious reservations over the data submitted by the distribution companies which shows that Sepco did not receive a single complaint in a day in any of its complaint centers. Similarly, Pesco, Qesco, Fesco, Mepco and Hesco also received only 2 to 3 complaints per day in each of their complaint centers in FY 2019- 20.
On safety, Nepra stated it considers the safety as the most important parameter for measuring the performance of Discos. From the reports provided by Discos, it is evident that around 160 fatal accidents of employees and public occurred in 2019-20. Nepra Authority took serious notice and decided to conduct investigations under Section 27A of the Nepra Act. Accordingly, investigations against K-Electric, Pesco, Hesco, Sepco and Fesco were conducted, whereas the remaining Discos are also in the plan.
During the FY 2019-20, Nepra continued monitoring activities including data verification and found that the data submitted by the Discos is significantly fudged. Accordingly, Nepra took serious action and legal proceedings against Mepco were initiated due to non-compliance with Performance Standards and Codes of Conduct and due to misreporting of data.
After following all due legal process including hearing opportunities, Mepco was penalized with a fine of Rs. 06 million. Previously in FY 2018-19, Pesco and Iesco were penalized with the fine amounts of Rs. 06 million and 04 million, respectively. During 2019-20, Nepra decided to abandon the exercise of Performance Ranking of distribution companies till such a time that reliable data is received. For this purpose, Nepra has initiated efforts to move Discos towards the adoption of AMI/AMR system and K-Electric is taking the lead in this regard compared to all other Discos.
"Inspite of constant instructions and monitoring by the regulator, Discos did not show any distinguishable performance in FY 2019-20 and continued with businesses as usual. Therefore, major reforms like privatisation of Discos need to be carried out," concluded the regulator.