Electricity distribution companies (DISCOs) are contributing over Rs. 600 billion annually to Pakistan’s growing circular debt, which has now reached a staggering Rs. 2.467 trillion. Despite claims of a 92.44 percent recovery rate, systemic inefficiencies and financial mismanagement have worsened the crisis.
DISCOs reportedly recover 10-15 percent of billed electricity through overbilling practices to artificially inflate recovery rates, but actual losses remain significant. Pending bills from private and public sector consumers have surged by 69.64 percent since 2021, reaching Rs. 2.017 trillion. Among these defaulters are influential political and industrial entities, whose outstanding dues have risen to Rs. 1.094 trillion, up from Rs. 900.82 billion in FY2023.
Profit-making DISCOs, including IESCO, GEPCO, LESCO, and MEPCO, have been forced to provide Rs. 125.78 billion in cross-subsidies to support loss-making companies. However, no concrete measures have been implemented to address this imbalance or improve the financial health of the sector.
In FY2024, transmission and distribution losses exceeding regulatory allowances cost the sector Rs. 276.35 billion, while shortfalls in recovering billed amounts added another Rs. 314.506 billion to the circular debt.
