DISCO Performance Fuels Circular Debt Crisis in FY25, NEPRA Warns

Pakistan’s power sector faced another setback in FY25. According to NEPRA, weak DISCO circular debt trends added Rs397 billion to the national burden. The regulator shared these findings in its State of the Industry Report 2025.
This increase reflects long-standing operational issues. As a result, consumers and public finances remain under pressure.

Progress on Costs, But Problems Persist

NEPRA acknowledged some positive steps during the year. For example, authorities retired expensive and underused power plants. In addition, tough negotiations with IPPs helped lower electricity tariffs.
However, these gains did not solve deeper problems. Poor planning, weak governance, and unreliable data continue to hurt performance. Therefore, efficiency improvements remain slow across the sector.

Why DISCO Circular Debt Keeps Growing

The report clearly linked DISCO circular debt growth to poor distribution performance. High AT&C losses triggered load-shedding, which NEPRA called unlawful and unfair. This approach penalised paying consumers while wasting available generation capacity.
Moreover, several DISCOs failed across key indicators. These included revenue recovery, service quality, and loss control. As a result, customer dissatisfaction continued to rise.
PESCO, QESCO, SEPCO, and HESCO performed the worst. PESCO alone caused a fiscal loss of Rs87.5 billion. Similarly, QESCO and SEPCO added losses of Rs52.4 billion and Rs36 billion.

Mixed Results Across Distribution Companies

Some utilities showed limited improvement. KE reported losses of 14.74 percent, slightly above its allowed limit. FESCO missed its target by only 0.64 percent, showing relative stability.
LESCO improved from FY24 levels. However, it still exceeded allowed losses, causing a Rs35.2 billion fiscal impact.
On the recovery side, a few DISCOs stood out. MEPCO led with a 101.7 percent recovery rate. GEPCO and LESCO followed closely, offering some hope for reform.

A Complex Road Ahead

NEPRA described the sector as entering a new phase. The era of power shortages is ending. However, surplus capacity and rising costs create fresh challenges.
Therefore, experts stress urgent reforms. Without stronger governance and data driven planning, DISCO circular debt may continue to grow. Sustainable change now depends on accountability and consumer focused policies.