Daily Times

National Electric Power Regulatory Authority (NEPRA), in its recently released “Performance Evaluation Report of Distribution Companies for the Year 2017-18”, expresses utter dismay over the DISCOs’ continued poor performance. NEPRA should share part of the blameas, instead of such year-end desk evaluations, it needed to work more closely with the DISCOs during the whole year to ensure that they met the set targets. Even more disturbing is the Authority’s observation that some of the DISCOs have been cooking up data to mask their actual performance which in reality may be even poorer.

Every year, DISCOs submit to NEPRA their progress in the previous year on a number of performance indicators (PIs) such as electricity losses, reliability and quality of service, handling of consumer complaints, recovery of bills, faults, safety lapses and accidents, etc. DISCOs are required to do so pursuant to a set of PIs that NEPRA had established and put into force in 2005. Each year, NEPRA sets targets for these PIs for each DISCO which it has to meet. The latest report covers DISCOs’ performance during the fiscal year 2017-18 and puts that performance in perspective by comparing it against their performance in the 4 preceding years (2013 to 2016).

The latest report reveals that, barring a couple of DISCOs on a couple of PIs, most DISCOs failed on most counts to meet the performance standards that were set for them by NEPRA for 2017-18. A couple of examples follow.

On electricity losses, for instance, all the DISCOs, except IESCO, fell short of meeting their targets, with PESCO, SEPCO, and QESCO faring the worst. The report notes that owing to these high losses, the country is losing over 45 billion rupees annually. It is pertinent to note here that the allowed losses by NEPRA are much higher than what the best industry practice would dictate, meaning that the actual loss to the nation could be even twice as much or even more than what NEPRA has estimated.

Both NEPRA and Ministry of Energy should take a serious note of it and carry out a proper investigation to fix responsibility and follow it by punitive action against those responsible to ensure that this does not recur in the future

On the recovery of electricity bills, most DISCOs fell short, with QESCO, SEPCO, and HESCO faring the worst as these failed to recover 54%, 40%, and 23%, respectively, of the billed amounts from their consumers, thus contributing significantly to the nation’s loss of over 78 billion rupees as unrecovered revenue by the DISCOs.

The same goes for most of the other performance targets (service reliability, fault occurrences, load-shedding, efficiency in giving new connections, attending to consumer complaints, safety, avoiding of accidents, etc.) that were fixed for them by NEPRA. DISCOs’ performance on these indicators either improved slightly but still remained below the set targets or even further deteriorated during the past year.

This under performance has not been just for the previous year. According to NEPRA, DISCOs have been underperforming persistently over the past 5 years, and despite NEPRA’s warnings and imposing of financial penalties on them, the situation has not improved in any significant manner. The report makes note of another disturbing fact. Some of the DISCOs have been even cooking up data to mask their actual performance which in reality must be even worse.

While this persistent poor performance of DISCOs is certainly deplorable, NEPRA cannot escape part of the blame as it should have been amply evident by now that DISCOs were either not heeding to NEPRA’s warnings or were facing some genuine issues that were beyond their control. And there is some credence to this latter assertion because in one breath, NEPRA accuses the DISCOs of poor performance and in the next it bails them out by acknowledging that, “The fact remains that they have some inherent problems such as geographical issues, dilapidated distribution system, law & order situation, and political factors etc. which are the causes of their unsatisfactory performance.”

There are a couple of contradictions in the NEPRA report, however. For instance, on the issue of electricity losses, NEPRA is holding the DISCOs responsible for the total losses (transmission and distribution or T&D losses) that occur between generation and final delivery. This is not fair. DISCOs should not be held responsible for the losses that occur upstream to their systems as they don’t have any control on these. They should be held accountable for only that portion of electricity that is being lost in the distribution systems.

NEPRA has also lumped both the technical and non-technical (mostly pilferage of electricity and metering errors) losses together in the target for losses. It should have segregated the two categories of losses which is not too difficult to do. This segregation would have provided a better insight into the nature and extent of loss that is taking place in each category and would also help in devising appropriate strategies and measures to deal with the two categories of losses in the future.

Going forward from here, NEPRA should take a more active and helpful approach in managing the current poor performance of DISCOs. Its approach to handling the performance issues of DISCOs should be somewhat light-handed yet firm.

First, it should get in close touch with DISCOs to fully comprehend their circumstances and the hurdles they may be facing in meeting the performance targets established by the Authority. It should select and prioritize a list of performance measures and work out a concrete and time-bound action plan with active participation of the DISCOs’ relevant staff to manage their progress from the existing dismal state to the levels of performance that NEPRA wants them to achieve. NEPRA must also help the DISCOs in securing the funds that DISCOS might require to execute the performance improvement plans. Mere warnings and imposing of penalties won’t accomplish much.

Second, NEPRA should also realize that such year-end and after-the-fact evaluations with occasional visits to DISCOs that NEPRA has been using will also accomplish little as there will always be information asymmetries between it and the DISCOs that will be either difficult or costly to deal with. It will need to devise a suitable compliance monitoring and enforcement system that involves minimal human interference. This system should have the capability to continuously monitor the progress of DISCOs on a selected set of PIs with their year-end implications. This will enable NEPRA to take note of any deviations from the expected progress at regular intervals and initiate timely remedial actions to obviate lapses in performance at the year’s end.

The cooking up of data by some of the DISCOs is, however, a grave matter. Both NEPRA and Ministry of Energy should take a serious note of it and carry out a proper investigation to fix responsibility and follow it by punitive action against those responsible to ensure that this does not recur in the future. But they should ensure that DISCOs do not make staff at lower management tiers scapegoats for such practices as this could not have happened without the knowledge and consent of the senior managers. Ministry and NEPRA must show a zero-tolerance policy for such mal-practices.

The writer is a freelance consultant specializing in sustainable energy and power system planning and development