The Asian Development Bank (ADB) has reported that a significant portion of the serviced population in Pakistan, up to 70%, did not pay their electricity bills.
It was attributed to a combination of factors, including the inability of some citizens to afford the payments, as well as inefficiencies and widespread irregularities in the billing and collection processes.
The Bank’s report, titled “Pakistan National Urban Assessment,” highlighted that the country’s inadequate tariff regime was a complex issue that undermined the financial sustainability of the Distribution Companies (Discos). This problem was particularly pronounced in rural areas, where 50% to 70% of the serviced population had failed to pay their electricity bills, again due to a mixture of affordability concerns and operational inefficiencies.
Furthermore, the ADB report suggested that the courts in Pakistan had contributed to the issue by issuing stay orders that delayed legal proceedings for up to a year. This allowed offenders of meter tampering and related ordinances to simply pay a fixed fine, rather than face more substantial consequences, which perpetuated the problem.
According to the report, the ADB had stated that only the privatized K-Electric company in Pakistan was financially sustainable. Prior to privatization, K-Electric had suffered significant losses, but it had since recovered and operated solely from its revenue collections.
Despite considerable resistance, K-Electric had succeeded in metering its expansive 6,500 km service area, which extended beyond Karachi to five districts in Sindh and Balochistan. This had reduced electricity theft and the corresponding loss in income for the company.
Additionally, through the implementation of load-shedding, K-Electric managed to control the losses from illegal connections that still existed in some areas.
The Bank had presented K-Electric’s successful model as an example, but political issues and strong resistance from trade unions had blocked the privatization of other Distribution Companies (Discos) in Pakistan.
In response to this, the government was considering segmenting utility operations and infrastructure expansion, such as separating urban and rural areas, to reduce costs and control losses.
The potential of publicly offering the Discos on the stock market, with the government retaining most of the shares, was also being studied as a possible solution.
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