Pakistan Institute of Development Economics

P & R Vol.2 Issue 5
Reforming electricity distribution
Publication Year : 2021

The power sector in Pakistan experience shortages not due to lack of supply, but mostly because of the financial issues of the distribution companies (DISCOs). Weak governance and mismanagement are prevalent in the distribution sector. About 10 per cent on average of the electricity sold is not recovered. There are issues of overbilling. More than 18 per cent of electricity is lost due to system inefficiencies and network deficiencies. DISCO employees (management) after corporatisation are company employees but they are still treated as government employees and get transferred quite frequently. In the DISCO boards, there is hardly any expert to guide DISCO management. DISCOs are not independent to take decisions; even for minor purchases, they need approval from the power division. For determining the sector’s performance the focus is only on two key performance indicators (KPIs), i.e., transmission and distribution losses and recovery rates; no consideration is given to reliability or sustainability of supplies to end-consumers. Though there is a difference among DISCOs based on two main KPIs used; when viewed in terms of sales volume, there is not much difference in performance. The socio-political environment, in which the company operates, plays an important role.