Consumers to pay for Discos’ inefficiency

Published November 20, 2014
5495 transformers of 10 companies caused a loss of Rs1.5 bn during Jul-Sept.—APP/File
5495 transformers of 10 companies caused a loss of Rs1.5 bn during Jul-Sept.—APP/File

LAHORE: Ten distribution companies suffered damage to 5,495 transformers of various capacities during the three summer months (July-September), costing them over Rs1.5 billion as, what the experts claim, asset management fails in the sector.

During the corresponding period last year, the number of damaged transformers was 4,817. Apart from being higher in number, the capacity of these damaged transformers was roughly 91MVAs (or roughly 100MW) more than those hit last year.

According to the data compiled by the sector, the Lahore Electric Supply Company (Lesco) topped the list with 1,198 transformers, followed by Peshawar Electric Supply Company (Pesco) 1,110, Multan Electric Supply Company (Mepco) 915, Faisalabad Electric Supply Company (Fesco) 610, Gujranwala Electric Supply Company (Gepco) 547, Islamabad Electric Supply Company (Iesco) 479 and Sukkur Electric Supply Company (Sepco) 434.

Also read: Nepra bars Discos from fresh recruitments

In the month of September alone, the number of damaged transformers had risen to 1,878 against 1,249 last year during the same month. In MVAs terms, the damage was 237MVAs against 146MVAs last year.

Lack of assets management by power distributors hit the economy in many ways

“It reflects the quality of asset management in the sector,” says a former head of Lesco. A distribution transformer’s cost varies from Rs200,000 to Rs450,000. If average cost is taken around Rs250,000, the total damage is around Rs1.5 billion, or Rs500 million a month. The most crucial question is who is going to pay for these damages. The distribution companies would take this figure to National Electric Power Regulatory Authority (Nepra) as necessary expenditure and request it to include the cost in their tariff. “In a nut shell, the companies are managing their assets inefficiently, and the consumers would be made to pay,” he summed up.

“The damage to the sector does not stop at direct cost calculation of these transformers but also includes opportunity cost for the economy and the sector,” says a former chief of Pepco. During the damage period – removal and replacement – that extended to even days if the media reports are to be believed, the company was not able to sell power to its consumers and factories, big or small, could not produce anything. If those costs are calculated and included in the tally, the total damage in monitory terms would swell by a few billion rupees more.

“All these companies have elaborate paraphernalia to manage these assets,” insists a customer services director at a distribution company. “The problem is that the entire system is being run on ad hoc basis, with no one being held accountable. Each company, on an average, is having a head for not more than six months. With each head, the entire management team and strategy changes in every distribution company. With such a heavy turn-over on the top, no wonder these companies have become rudderless ships. Otherwise, transformers are designed for outside working, built to withstand weather pressures.

Unfortunately, the same weather vagaries are used as “valid reasons” for the damages and people are forced to pay the cost. These are small manifestations of the bigger malice that afflicts the sector, and the next year is bound to be worse if rot is not stemmed at the earliest and the heads of these companies are held accountable on asset management as well,” he concluded.

Published in Dawn, November 20th, 2014



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