LAHORE: The Lahore Electric Supply Company has asked the National Electric Power Regulatory Authority (Nepra) to revise its line losses, recovery targets, distribution margin etc keeping in view severe financial crisis it is passing through due to Covid-19 pandemic lockdown.

The company has warned of further increase in the circular debt due to lesser recovery, if Nepra fails to pay attention to the issues, according to a letter.

“At present, the country is passing through a severe crisis due to pandemic. In addition to the downturn in the national economy, it has specifically led to closure of industrial and commercial loads. And the latter reason has deeply affected operations of the power distribution companies (Discos),” the letter written by Lesco to Nepra recently said.

It mentions that approximately the large industrial and commercial units have 40 per cent share in overall consumption mix of Lesco. Due to this decrease in sale of such “zero loss units”, the level of company percentage of loss has increased. Lesco has also tried to justify its stance to Nepra by showing a comparison of losses with receipt of units and sale / difference of mixed consumers of all categories and zero loss industrial (B-3/4) and commercial units. It shows that reduction in sale of zero loss units has led to increasing losses despite all efforts and hectic anti-theft campaign under way in Lesco,” the letter said, adding that apart from large industry (B-3 & B-4), medium industry having load between 70KW to 500kW has also a substantial impact over Lesco’s sale.

“It is therefore requested that the target of the losses of present and coming months with effect from March 2020 may be allowed to be revised by excluding the share of “zero loss units”.

While discussing Covid-19 effect on recovery, Lesco mentions that zero loss large industrial and commercial units are the best paymasters and recovery against such consumers is almost 100 per cent. “But due to lockdowns and closure of industry, such consumers are unable to make payments. Hence there is need for the revision in recovery targets,” the company sought.

Explaining the financial impact, Lesco argues that its ability to meet its financial obligations during Covid-19 pandemic has been drastically affected. While mentioning the 23,785 GWh and 21,132 GWh per year Nepra determined sale for the year 2019-2020 and 2018-19 respectively, company says that Nepra’s target based on sale of high units viz 23785 GWh for 2019-20 has translated into lesser tariff to end-consumers, but requiring to a certain level of Recovery/Revenue. Due to such lesser Sale and Recovery, as per tariff determination mechanism, Lesco is obligated to request Nepra for a compatible adjustment.

“There is a drastic negative impact of Covid-19, on GWh Sales depicted by a reduction of Sale volume by 20% approximately in April 2020, as compared to actual Sale volume of April 2019. This following trend of sale volume has resulted in stringent cash flows implications, which needs immediate remedial measure and revision of Power Purchase Price (PPP) and distribution margins (DM) in Rs/KWh. Additionally due to closure of industrial and commercial sectors, demand dropped substantially since March 2020, which has a negative impact over capacity charges that may continue in the current financial year -- to say the least.

“Consequently, reduced determined sales volume of Lesco by 20 % for last quarter in comparison with last year (2018-19), is needed to be fixed allowing Lesco to recover its DM and PPP cost to fulfill its financial obligations.

“This situation warrants immediate attention otherwise lesser recovery of PPP and DM would further inflate the circular debt. Besides, this will badly effect Lesco liquidity,” the company warns.

“Additionally, quarterly adjustment for three quarters for the year 20 1 9-20 and DM Adjustment for the period also needs to be determined on priority,” it demands.

Published in Dawn, August 24th, 2020