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Consumers pay Rs100 bn a year for power they never use

In a shocking disclosure, the top executive of the Lahore Electric Supply Company (Lesco) has said electricity consumers of Pakistan are paying almost Rs100 billion a year for power they have never been supplied or used.

This is being done in the name of ‘excessive billing’, which has reached a horrifying 20 percent of the overall billing and touches the figure of Rs100 billion per annum.This scandal emerges in the official letter of Ahmad Rafay Alam, Chairman of the Lesco Board of Directors (BoDs), to the Water and Power Secretary Zafar Mehmood written on July 14, 2012. A copy is exclusively available with The News.

The letter pinpointed that in the jurisdiction of Lesco, in November 2011, incidents of excessive billing in Kasur came to the notice of Customer Service Committee of the BoDs.The letter shows that the audit by the manager (internal audit) was presented to the audit committee of the Lesco BoDs in its first meeting held on April 28, 2012 showing that up to December, 2011, Rs6.79 billion in excessive billing was done to cover the line losses at the first instance and then to reduce the arrears and also to redress consumer complaints temporarily.

Alam further divulges that the audit committee directed the manager (internal audit) to carry out the audit of all circles of Lesco along the same lines as the audit of the Kasur Circle and the findings of the same will be available in a few weeks time.

Preliminary reports indicate that for the Okara Circle, excessive billing for the period July 2011-March 2012 in the region stands at Rs420 million.So it has become clear to the BoDs that excessive billing is done to hide the line losses from Nepra and the Water and Power Ministry. Since consumers raise questions and dispute excessive bills, many of these bills are later revised, but the excessive amounts billed continue to appear as trade debts. The trade debt of Lesco has swelled to Rs16.11 billion in January 2012.

Alam also brought another issue to the notice of the Water and Power Ministry in his letter that the Punjab government and its attached departments that owed Rs7 billion to Lesco had declined to pay the same, arguing that they had been excessively billed due to defective meters and other reasons. “So the BoDs feel this disputed amount will most likely never be recovered.” The official said all Discos are involved in excessive billing, which is about Rs100 billion in one year. According to senior officials in the Water and Power Ministry and Discos, the bleeding and inefficient power sector has siphoned up the staggering Rs380 billion in 2011-12, and the recovery rate of dues by the Central Power Purchase Agency (CPPA) stands at just 65 percent showing that the authorities concerned failed to recover 35 percent electricity bills.

However, the government claims that the recovery of electricity bills stands at 87 percent, which is not true. The official said electricity power distribution companies in the last financial year 2011-12 braved losses of Rs114.194 billion because of excessive losses and low recovery of bills. “And to offset this impact, poor consumers are excessively billed with almost the same proportion,” he argued.

According to the latest working over the losses of Discos as of June 30, 2012 in the wake of line losses and low recovery, Lesco sustained loss of Rs8.707 billion in 2011-12, Gujranwala Electric Power Company (Gepco) Rs1.506 billion, Faisalabad Electric Supply Company (Fesco) Rs1.439 billion, Islamabad Electric Supply Company (Iesco) Rs3.133 billion, Multan Electric Power Company (Mepco) Rs6.602 billion, Hyderabad Electric Supply Company (Hesco) Rs12.912 billion, Sukkur Electric Supply Company (Sepco) Rs20.939 billion, Quetta Electric Supply Company (Qesco) Rs23.448 billion and both Peshawar Electric Supply Company (Pesco) and Tribal Electric Supply Company (Tesco) experienced the loss of Rs35.507 billion, which is alarmingly at a higher side. The official said the government claims that line losses exist at 19.5 percent, which is factually at 22-23 percent and all Discos are involved in exposing poor consumers to excessive billing to show that line losses are at 19.5 percent on an average. “Some unscrupulous and influential officials in the electric power distribution companies who help commercial and industrial establishments steal electricity and make illegal money in return and send the inflated bills to hide the loss to some extent the system faces in the wake of electricity theft and line losses. The consumers are mainly exposed to the excessive billing in the months of May and June every year,” he disclosed. He explained that the billing data base system of Wapda Lahore was developed in 1968 and is now obsolete. The official also mentioned that USAID had implemented its pilot project — Blind Meter Reading (BMR) in the jurisdiction of Peshawar Electric Supply Company (Pesco). The finding of this project was that 10-20 percent excessive billing was borne by consumers.

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