Pakistan’s power distribution companies (Discos) are facing a financial crisis, haemorrhaging around $1 billion annually due to rampant line losses, theft, and inefficiencies.
A recent report from the Ministry of Finance, prepared to fulfill the International Monetary Fund’s (IMF) requirements, highlighted the dire straits of Discos as they face a confluence of high-risk factors that contribute to operational inefficiency and an entrenched 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 (Gesco), Quetta Electric Supply Company (QESCO), and Peshawar Electric Supply Company (Pesco).
This debt is largely driven by the inability of Discos to recover sufficient revenue from consumers to cover the costs of electricity generation and distribution.
Poor collection rates, high transmission and distribution losses, delayed government subsidies, and infrequent tariff adjustments create a cycle of financial strain.
According to the report, this circular debt ultimately hinders Discos’ capacity to invest in infrastructure, maintain equipment and improve operational efficiency, perpetuating a cycle of inefficiency and financial instability.
