The Asian Development Bank (ADB) has issued a concerning report revealing that up to 70% of the serviced population in Pakistan does not pay their electricity bills. This widespread default is attributed not only to the inability of many to afford the charges but also to significant inefficiencies and rampant irregularities in billing and collection processes.
In its report titled ‘Pakistan National Urban Assessment,’ the ADB pointed out that the country’s inadequate tariff regime is a complex issue that severely undermines the financial sustainability of the Distribution Companies (Discos). The problem is especially acute in rural areas, where between 50% to 70% of the serviced population is in default. The report underscores that inefficiencies within Discos, coupled with irregular billing practices, exacerbate the situation.
The ADB also criticized the judicial system, arguing that courts contribute to the problem by issuing stay orders that delay legal procedures for up to a year. This leniency, coupled with allowing offenders of meter tampering and other related offenses to merely pay a fixed fine, further weakens the enforcement of billing regulations.
In contrast to the struggling Discos, the report highlights K-Electric as a model of financial sustainability. Once plagued by significant losses, K-Electric has managed to recover post-privatization by relying on revenue collections. The company has successfully metered its vast 6,500 km service area, which extends beyond Karachi to five districts in Sindh and Balochistan. By implementing load-shedding measures, K-Electric has been able to reduce losses from illegal connections, thus improving its financial standing.
Despite the success of K-Electric, the privatization of other Discos has been stalled due to political challenges and strong resistance from trade unions. In response to these challenges, the government is exploring options such as segmenting utility operations and infrastructure expansion between urban and rural areas to reduce costs and control losses. Additionally, the possibility of publicly offering the companies on the stock market, with the government retaining a majority of the shares, is under consideration.
