ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) has imposed fines totalling Rs95 million on two Sindh-based power distribution companies — Sukkur Electric Power Company (Sepco) and Hyderabad Electric Supply Company (Hesco) — for exceeding loss targets, poor recovery performance, and safety violations.

Nepra imposed a Rs50m fine on Sepco and Rs25m on Hesco for failing to meet targets for reducing transmission and distribution (T&D) losses and recoveries during FY24. An additional Rs20m fine was levied on Sepco for failing to ensure proper grounding of electricity poles and non-compliance with safety protocols.

According to Nepra, the penalties follow the findings of the Circular Debt Report for FY24, which showed that national electricity losses rose to 18.31pc from 16.84pc in the previous year. This was significantly higher than Nepra’s allowed average of 11.77pc, contributing around Rs276bn to the circular debt. Despite Rs163.1bn being allocated for network improvement, distribution companies failed to achieve the required reductions.

The report noted that Sepco’s T&D losses increased to 34.91pc in FY24 from 34.43pc in FY23, resulting in a financial impact of Rs29.1bn, up from Rs20.4bn. Meanwhile, Hesco’s losses rose marginally to 27.62pc from 27.53pc, with a corresponding rise in financial loss from Rs15.1bn to Rs23.2bn.

Recovery rates also remained a concern. The national average held steady at 92pc, but the unrecovered amount grew to Rs315bn in FY24 from Rs236bn a year earlier. Sepco’s recovery declined to 65pc from 67pc, pushing its unrecovered amount to Rs38bn from Rs27bn. Hesco also failed to meet recovery targets, though specific figures were not disclosed.

Power Minister Sardar Awais Leghari has previously criticised Sepco and Hesco for lagging behind other distribution companies, attributing part of the problem to political interference that has prevented changes to their boards of directors. Other Discos have reportedly improved after board reconstitutions.

During regulatory proceedings, Sepco failed to provide satisfactory responses to a show-cause notice related to its performance. Nepra concluded that the company had not made adequate efforts to reduce losses or improve recoveries and thus imposed a Rs50m fine under the Nepra Fine Regulations, 2021. Hesco received a Rs25m fine for similar shortcomings.

Both companies argued that their performance had been impacted by high electricity prices, weak socioeconomic conditions, and political interference. They also cited electricity theft as a major factor, often resulting in law and order issues. However, Nepra found these claims to be either unsupported or exaggerated.

Additionally, Nepra penalised Sepco with two separate fines of Rs10m each — one for failing to achieve 100pc pole grounding and another for general non-compliance with safety standards. The regulator stated that such penalties are intended to enforce accountability in the power sector and minimise the financial burden on consumers caused by inefficiencies in distribution.

Published in Dawn, August 12th, 2025