Pakistan’s power sector equity turned negative by Rs800 billion during the last fiscal year, mainly due to declining electricity sales, persistent losses of distribution companies (DISCOs), power theft, weak recoveries and the growing burden of circular debt, according to the Ministry of Finance.
The disclosure was made in the Finance Ministry’s annual performance report, which stated that total liabilities of the power sector rose to Rs9.2 trillion, while total assets stood at Rs8.4 trillion, resulting in negative equity.
The report identified key drivers of the negative equity as continued losses of DISCOs, widespread electricity theft, repricing of generation companies, accumulation of circular debt and an unsustainable business model.
To keep the power sector operational, the government provided subsidies exceeding Rs1 trillion during the last fiscal year, including Rs552 billion allocated specifically for distribution companies, the report said.
According to the report, six out of ten DISCOs remained loss-making, while four companies collectively reported profits of Rs39 billion. Profitable entities included Gujranwala Electric Power Company, which posted a profit of Rs13.6 billion, and Tribal Electric Supply Company, which earned Rs9.4 billion, largely due to subsidy support.
Faisalabad Electric Supply Company reported a profit of Rs9.6 billion, attributed to improved recoveries, while Multan Electric Power Company earned Rs4.5 billion. The report, however, stressed the need for stronger measures to curb electricity theft.
On the other hand, six DISCOs collectively incurred losses of Rs258 billion, with their cumulative losses reaching nearly Rs3 trillion. Quetta Electric Supply Company emerged as one of the worst-performing utilities, posting an annual loss of Rs113 billion, with total accumulated losses rising to Rs825 billion. The report cited structural issues, low recoveries and severe power theft as major challenges in Quetta.
Peshawar Electric Supply Company recorded losses of Rs93 billion, pushing its cumulative losses to Rs764 billion. Electricity companies operating in Sukkur, Hyderabad, Lahore and Islamabad also reported losses amounting to billions of rupees.
The Finance Ministry said overall revenue of the power sector declined to Rs3.9 trillion, marking a four percent decrease compared to the previous year. The decline was attributed to delayed tariff adjustments, circular debt pressures and recovery issues.
The report further noted a 300 percent increase in losses of state-owned enterprises, which received annual government support amounting to Rs2.1 trillion.
