ISLAMABAD, Feb 26 (APP):The Ministry of Energy (Power Division) on Thursday termed the performance of power distribution companies (DISCOs) during FY2024-25 as a “historic turnaround”, asserting that key operational and financial indicators improved significantly despite concerns raised in a recent report by National Electric Power Regulatory Authority (NEPRA).
Responding to the report, the Power Division said the data presented did not fully capture the ground realities of the past fiscal year and the narrative of stagnation ignores a historic turnaround in operational and financial indicators achieved during FY 2025.
The ministry said circular debt recorded an unprecedented reduction of Rs780 billion during FY2024-25, declining from Rs2,393 billion in FY24 to Rs1,614 billion in FY 2025. It described this as a landmark achievement made possible through coordinated policy and operational measures.
According to the statement, improved DISCO performance contributed Rs193 billion to this reduction, while successful negotiations with power producers on Late Payment Interest (LPI) waivers yielded Rs260 billion. Improvements in macroeconomic indicators accounted for an additional impact exceeding Rs300 billion.
The Rs 193 billion contribution from improved DISCO performance is a direct outcome of the operational and financial discipline we have enforced on the ground.
Contrary to the impression of inefficiency, DISCOs achieved a remarkable increase in recovery performance. The recovery rate surged from 92.4% in FY 2024 to 96.6% in FY 2025 — a 4.2 percentage point jump. This improvement is the direct result of aggressive enforcement against defaulters and enhanced billing accuracy, and it is the primary driver behind the Rs. 193 billion contribution to circular debt reduction.
The most critical metric for sector health — the amount of revenue left uncollected — has seen a staggering turnaround. The financial burden of under-recovery was slashed by Rs. 183 billion, plummeting from Rs. 315 billion in FY 2024 to just Rs. 132 billion in FY 2025. This 42% reduction in financial bleeding is a major factor in slowing — and now reversing — the accumulation of circular debt.
Transmission and Distribution (T&D) losses decreased from 18.3% to 17.6% in just one year. This 0.7 percentage point reduction has already delivered savings of Rs. 11 billion by plugging inefficiencies in the system.
Clarifying the issue of load management, the Power Division said economic-based load shedding was being implemented in line with the National Electricity Policy to maintain financial sustainability. It warned that lifting AT&C-based load shedding without an alternative mechanism could impose an additional annual burden exceeding Rs500 billion.
The government fully acknowledges this concern. In line with ongoing digitalization efforts, the transition towards transformer-level targeted load shedding is already underway.
While acknowledging that legacy challenges persist, the Power Division said the latest figures reflected a clear improvement trajectory, citing record recovery rates, a 42% cut in under-recoveries, measurable reduction in T&D losses, and a historic Rs. 780 billion reduction in circular debt — with DISCOs contributing Rs. 193 billion of that relief.
It urged NEPRA, policymakers and the public to consider these verified achievements as evidence that reforms in the power sector were delivering results and placing the sector firmly on a path toward recovery.