ISLAMABAD: The caretaker government unveiled its strategy on Wednesday to tackle rampant power theft and address the pressing issue of non-recoveries in the nation’s power system that have reached a staggering sum of approximately Rs589 billion a year, equivalent to nearly $2 billion.
The surge in these losses has exacerbated the existing circular debt crisis, rendered the power system financially unsustainable and caused tariff hikes. In response to the critical challenge, the government is preparing to launch a comprehensive and vigorous crackdown on power theft, employing a ‘full force’ approach. Additionally, they will implement a series of measures aimed at curbing these losses and restoring financial stability to the power sector.
Caretaker Power Minister Muhammad Ali and Information Minister Murtaza Solangi announced a robust crackdown during a news conference here to reduce mounting technical and commercial losses, being faced by power distribution companies. In response to public anger over inflated electricity bills in August, the interim government is acting despite its limited options to address the issue. Amid nationwide protests, the government has so far been unable to provide immediate relief due to the stringent IMF conditions.
“Some domestic consumers steal electricity and others don’t pay bills,” the power minister said. Minister Muhammad Ali said Pakistan currently had 10 distribution companies (Discos), including K-Electric. He disclosed an annual loss of Rs589 billion due to electricity theft and unpaid bills, emphasising that these factors drive up costs for other consumers. “Until this is stopped, electricity prices will not come down,” he added. He said the prime minister had issued directives to tackle electricity theft and improve bill collection.
The minister said that in Discos with comparatively better recovery rates, such as Lahore, Faisalabad, Gujranwala, Multan, and Islamabad, losses amounted to 79 billion units, equal to Rs100 billion out of a total billing of Rs3,044 billion. Conversely, Discos in Peshawar, Hyderabad, Sukkur, Quetta, Tribal Areas, and Azad Jammu and Kashmir incurred losses of Rs489 billion as their recovery ratio is up to 60 per cent. He announced plans to use data to target areas with higher electricity theft for crackdowns and increased attention to curb the problem.
The government is implementing a multi-pronged approach to address the issue, the minister said. He explained, “Where theft is below 30 per cent, we plan to employ technological solutions to curb it. In cases where losses range from 30 to 60 per cent, we are exploring the possibility of involving the private sector in management.” Additionally, for areas experiencing losses exceeding 60 per cent, stringent enforcement measures would be taken, he asserted. Muhammad Ali also outlined the government initiatives to enhance the management of distribution companies (Discos), stating, “We are reviewing the composition of their boards of governors and management, and changes will be made accordingly”.
Moreover, the power minister secured the full support of provincial chief secretaries and police chiefs for plan to combat electricity theft, which includes addressing complicit officials. The measures also include reining in officials who aid the pilferage of electricity. “We have prepared a list of officers involved in the theft,” the minister said. “They are being reshuffled and will be removed from field jobs. We have sent the list to the Election Commission of Pakistan (ECP) for approval of their transfers.”
The government will create provincial taskforces, led by home secretaries, and comprising provincial energy secretaries, a federal government representative, and police officers. Similar taskforces will be headed by commissioners at the divisional level, deputy commissioners at the district level, and assistant commissioners at the tehsil level. The minister said that operations to overcome electricity theft would be overseen by his ministry in Islamabad, with a control room and dashboard at PPMC (Power Planning and Monitoring Company) for daily and hourly monitoring of Discos’ performance. Implementation will be carried out at the provincial, district, and tehsil levels.
Power Minister Muhammad Ali also announced efforts to draft a new Electricity Theft Control Act. This legislation will facilitate the establishment of enforcement infrastructure nationwide and the creation of specialised courts to handle complaints and impose penalties. “Our target is to finalise the draft of this ordinance in the next two to three weeks and send it for approval,” he said.
To a query, he confirmed efforts to reduce capacity payments, emphasising that this would be a gradual process. Regarding the future of distribution companies, he said the government is exploring both provincialisation and privatisation options. A decision will be made in consultation with the cabinet, he said.
Power Division Secretary Rasheed Langrial indicated a preference for privatisation in the long run. He also mentioned serious consideration of an initial public offering (IPO) for three companies, particularly for those Discos facing substantial losses due to low recovery rates stemming from theft and line losses. These companies would require preparations to become “privatisation-ready.”