Two power distributors in Pakistan plan PKR 153 billion investment in 5 years

Two major electricity distribution companies in Pakistan have submitted their investment plans to the National Electric Power Regulatory Authority (NEPRA), requesting a combined investment of PKR 153 billion ($545 million) for the fiscal years 2025-26 to 2029-30.

The Hyderabad Electric Supply Company (HESCO) has proposed an investment of PKR 110.3 billion, while the Sukkur Electric Power Company (SEPCO) has outlined a plan to invest PKR 51.8 billion.

In fiscal year 2023-24, SEPCO experienced a loss of 1,397.63 million units (34.74%) in its network, while HESCO incurred a loss of 1,389.5 million units (27.25%). To address these challenges, the companies need to implement comprehensive plans to enhance system capacity (transmission lines and grid stations), reduce network losses, improve reliability and quality of electric power, and avoid forced load shedding.

These plans also aim to reduce unnecessary operation and maintenance costs, maintain and upgrade the existing system.

NEPRA's State of the Industry Report 2023-24 highlights the deteriorating performance of Pakistan’s power sector, resulting in over PKR 660 billion in losses to the national exchequer. High transmission and distribution (T&D) losses and low recovery rates were identified as the primary contributors.

Revenue collection also fell short, with no distribution company (Disco) achieving the 100% recovery target.

The report also revealed that Pakistan’s power sector is struggling with systemic inefficiencies, escalating financial losses, and a mounting circular debt, which reached PKR 2.393 trillion by June 30.

NEPRA suggested that privatization or transferring operations to private management should be seriously considered if improving efficiency within the public sector proves challenging.

One of the primary challenges confronting Pakistan's electric power sector is the underutilization of its generation capacity. This inefficiency is contributing to high electricity costs across the country.

By the end of FY 2023-24, Pakistan's installed electric power generation capacity, including Karachi Electric (KE), reached 45,888 megawatts. However, the average annual utilization during this period was only 33.88%. Consequently, electricity consumers paid for 66.12% of unutilized capacity, which encompasses the cost of intermittency associated with renewable energy (RE) power plants.

These investment plans are part of the distribution companies’ multi-year-tariff petitions and include various development initiatives such as infrastructure development, commercial improvements, financial improvements, health safety & environment plans, and human resources improvements.