TRANSMISSION & DISTRIBUTION |

ELECTRICITY
SECTOR UPDATE

The Pakistan Credit Rating Agency Limited © January 2023

 Transmission & Distribution | Electricity – Jan’23

TRANSMISSION & DISTRIBUTION SECTOR UPDATE

Outlook: Stable
Drivers to the Outlook:

• With a direct relation with the growth in an economy, energy infrastructure serves as its backbone
and the Power sector is one of its major components. Within the power sector’s value chain
(including Generation, Transmission and Distribution (T&D)); T&D is the downstream sector,
facilitating an economy’s power consumption and productivity.
• As of FY22, Pakistan’s power consumption stood at ~133,665 GWh, posting a YoY growth of
~10%. Major share in power consumption was held by domestic consumers at ~45%, followed by
industrial consumers at ~25% and agriculture at ~8%.
• Pakistan’s overall power sector faces a multitude of deficiencies, the culmination of which is the
massive FY22 end stock of PKR~2.25tln of circular debt. Although the upstream sector has its fair
share of issues, but the key risks also stem from the structural and operational inefficiencies of
Transmission and Distribution sector.
• In FY22, of the ~140,337 GWh of power fed into the NTDC system; ~136,641 GWh was delivered,
reflecting a ~2.6% Transmission & Transformation loss; costing PKR~72bln.
• Of the ~150,570 GWh of power purchased by DISCOs in FY22, only ~124,629 GWh of power got
billed, reflecting line losses and theft of ~17%. While of the PKR~2,814bln billed PKR~2,571bln
were recovered, reflecting losses of 9%.

As is well-known, “Power Sector Reforms” have always been of the key agenda points of the IMF
Reviews. Policy directives from the IMF in its upcoming review are aimed at tackling some major
aspects of the power sector deficiencies by:
o Removing blanket subsidies for domestic consumers in favor of targeted subsidies
o Removing subsidies of export-oriented sector
o Increasing tariff to bridge the subsidy gap along with timely adjustments

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 Transmission & Distribution | Electricity – Jan’23

Power Consumption (GWh 000)

YoY: YoY: YoY:
150 YoY:
134 ↑10%
111 113 ↑2% 112 ↓0.6% 122 ↑8%

130 5.5
4.9 4.1 0.41
4.5 0.59 9.0
0.42 3.8 3.6
110 5.5 0.48 0.45 0.38 6.1 9.2
4.2 3.8
5.1 5.0 5.4 8.4 11.0
8.5 8.4 7.9 10.2
90
10.1 9.8 9.8
34
70 30
27 29 26

50
55 58 60
53 53
30
FY18 FY19 FY20 FY21 FY22
Domestic Industrial Agriculture Commercial Supplied to KE Bulk Supply Public Lighting Others

70
Consumption CPPA-G & KE - FY22 (GWh 000)
60
8.0
50

40

30 5.8
52
20
28
10 0.1 0.0 0.4
1.8 0.5
11 9.0 7.4 0.1
0 3.6 0.3 5.1
Domestic Industrial Agriculture Supplied to KE Commercial Bulk Supply Public Lighting Others

CPPAG KE

National Power Consumption Mix - FY22

4%
45% 25% 8% 7% 7% 0.3%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Domestic Industrial Agriculture Commercial Supplied to KE Bulk Supply Public Lighting Others

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 Transmission & Distribution | Electricity – Jan’23

NTDC | Transmission Network

Transformers Transformers
No. of Grid Transformation Transformation
Grid Station Potential Installed at Grid Installed at
Stations Capacity (MVA) Capacity (MVA)
(kV) Stations Grid Stations
FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22
500/220kV 500/220kV 220/132 kV 220/132 kV
500/220 16 17 44 46 24,000 25,500 34 36 6,610 7,200
220/132 46 50 - - - - 129 140 25,770 28,160
Total 62 67 44 46 24,000 25,500 163 176 32,380 35,360
Transmission Lines
Transmission Line No. of Circuits
(KM)
Potential (kV)
FY21 FY22 FY21 FY22
500/220 61 67 8,059 8,388
220/132 156 163 11,438 11,611
Total 217 230 19,497 19,999

NTDC Transmission & Transformation: Of the ~150,570 GWh purchased by DISCOs in FY22, 88.1%
was supplied via NTDC’s system. In terms of 550/200kV and 220/132kV transformations capacity ~6.3%
and ~9.2% additions were made; while ~2.6% additions in transmission line length were also made.
However, in peak demand months (summer), upward of ~65% transformers in the NTDC system get
overloaded and led to higher heating effect and failure in equipment.

KE | Transmission Network
Transformers
No. of Grid Transformation Transmission
Grid Station Potential Installed at Grid
Stations Capacity (MVA) Lines (KM)
(kV) Stations
FY21 FY22 FY21 FY22 FY21 FY22 FY21 FY22
220/132 11 11 13 13 4,580 4,580 365 364
132/11 69 69 168 175 7,135 7,465 833 838
Total 80 80 181 188 11,715 12,045 1,198 1,202

KE Transmission & Transformation: KE’s Transmission system handled ~20,408 GWh of power in
FY22 and ~2.8% capacity addition was made in its power 132/11kV transformation capacity.

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 Transmission & Distribution | Electricity – Jan’23

Meanwhile, ~26% of its 132/11kV transformers were overloaded in the peak months.

NTDC - Capacity and Demand (MW)

60,000
Projected →
12,674
10,0 00

12,566
10,824
50,000 8,950 9,199

1,528
40,000 -1,062 -434
-2,975 -2,483
-10,00 0

30,000

-20,00 0

20,000

32,276
30,814
30,231

29,389
28,253

28,027
26,741

26,252

25,779
25,627

-30,00 0

10,000
23,766

24,565

27,780

27,819

27,748

34,729

37,226

40,213

43,380

44,950
0 -40,00 0

FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 FY27

Generation Capacity Peak Demand Surplus/-Deficit

Till FY22, there was a ~2,483 MW capacity deficit in the NTDC system vs. the peak demand. However,
going forward, surplus capacity availability is projected in the system, since demand is expected to grow
with a 5-year CAGR of ~1.3% while the CAGR for generation capacity is expected at ~10.1%.

Number of Circles, Divisions, Sub-Divisions, 11 kV Feeders and their Loading Position - CPPAG
Sub- Loading Position of 11 kV Feeders (Nos.)
Circles Divisions 11 kV Feeders
Divisions 80-90% 91-100% Above 100% Total
FY18 57 245 1,161 8,843 809 976 418 2,203
FY19 57 251 1,170 9,220 710 757 364 1,831
FY20 58 251 1,172 9,706 1,240 675 308 2,223
FY21 59 251 1,172 10,189 1,198 682 328 2,208
FY22 59 252 1,177 10,666 879 794 445 2,118

CPPA-G Feeder System: In FY22, there was a ~4.7% YoY increase in the 11kV feeders of the CPPA-G
system while ~21% of its feeders were reported overloaded.

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 Transmission & Distribution | Electricity – Jan’23

Number of IBCs, 11 kV Feeders and their Loading Position - KE

Loading Position of 11 kV Feeders (Nos.)
IBCs 11 kV Feeders 80-90% 91-100% Above 100% Total
FY18 29 1,729 22 6 1 29
FY19 30 1,807 28 10 10 48
FY20 30 1,890 43 7 2 52
FY21 30 1,937 17 5 2 24
FY22 30 2,001 38 13 5 56

KE Feeder System: In FY22, there was a ~3.3% YoY increase in the 11kV feeders of the KE system
while ~9% of its feeders were reported overloaded.

Status of Power Lines - CPPAG

Kms Total HT Total LT Lines
132 kV 66 kV 33 kV 11 kV Lines (0.4 kV)
FY18 26,847 6,163 2,362 329,546 364,918 235,050
FY19 27,936 5,802 2,362 337,238 373,337 237,486
FY20 28,577 5,307 2,248 343,726 379,859 238,053
FY21 29,495 4,623 2,223 348,104 384,445 240,928
FY22 30,521 4,325 2,232 353,903 390,981 242,925

CPPA-G Distribution System: In FY22, there was a ~1.7% YoY increase in the distribution lines of the
CPPA-G system.

Status of Power Lines - KE

Kms Total HT Total LT Lines
132 kV 66 kV 33 kV 11 kV Lines (0.4 kV)
FY18 767 149 0 9,549 10,465 19,098
FY19 798 149 0 9,876 10,823 9,751
FY20 801 153 0 10,204 11,158 8,367
FY21 833 153 0 10,283 11,269 18,509
FY22 838 153 0 10,520 11,511 18,936

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 Transmission & Distribution | Electricity – Jan’23

KE Distribution System: In FY22, there was a ~2.1% YoY increase in the distribution lines of the KE-
system.

Peak Demand (MW)

7,000 6,00 0

5,079
6,000
5,00 0

4,324
5,000
4,00 0

3,587

4,000 3,287
3,184

3,00 0

2,620 2,552
3,000

2,00 0

1,610
2,000
1,291 1,217

843 1,00 0

1,000

0 0

LESCO MEPCO FESCO PESCO GEPCO IESCO QESCO HESCO SEPCO TESCO KE

FY18 FY19 FY20 FY21 FY22 Avg Peak Demand

LESCO has the highest peak demand of all DISCOs with a 5-year CAGR of ~3.7%, followed by MEPCO
with a CAGR of ~3.3% and KE with a CAGR of ~0.8%.

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 Transmission & Distribution | Electricity – Jan’23

Monthly Demand Growth (MW)

40,000 12%
9% 15%

6% 6% 6% 6% 7% 10%

35,000 2%
0% 5%

-3% -3%
30,000 26,170 25,600 26,319 0%

23,967 24,221 -5%

25,000 20,591 20,425 -10%

20,000 16,661 15,830 16,941 16,160 16,453 -15%

-20%

15,000 -25%

10,000 -30%

Aug 17-21
Jan 18-22

Mar 18-22

Oct 17-21
Sep 17-21

Dec 17-21
Feb 18-22

May 18-22

Jun 18-22

Jul 17-21
Apr 18-22

Nov 17-21
Monthly Peak Demand (MW) | LHS Avg. Demand 5 Year Growth Avg. Trend

Given that ~45% of power in Pakistan is utilized by domestic consumers, power demand peaks in the
summer months when the demand for indoor cooling is the highest.

Power Purchased from NTDC per DISCO (GWh '000')

140
9.0
2.3
6.1 4.5
120 2.2 5.6
5.1 5.0 1.8 5.4 6.7
1.7 2.0 5.6 4.3
5.7 4.7 5.6 4.4 5.5 4.3 6.6 12.7
100 6.3 6.6
6.3 12.0
11.0 11.1 11.0 13.0
12.0
80 11.8 11.4
11.7 16.6
15.5
14.2 14.4 14.8
60 17.5
15.0 16.0
14.4 14.5
40 22.5
19.0 19.4 19.3 20.5

20
23.7 24.3 23.5 25.4 28.3

0
FY18 FY19 FY20 FY21 FY22

LESCO MEPCO FESCO PESCO IESCO GEPCO QESCO HESCO SEPCO TESCO KE

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 Transmission & Distribution | Electricity – Jan’23

Following the demand pattern, LESCO is the largest purchaser of power, accounting for ~20% share in
FY22, followed by MEPCO with a ~16% share and FESCO with a 13% share. Meanwhile, KE purchased
~6% of the NTDC’s power.

FY22- Sold Units and Losses (GWh '000')

30

3.3
25

3.3
20
3.6
1.6
15
6.2
25.1 1.1 1.1
10 19.2
15.9 16.8
12.0 11.5 1.9
5 10.4 2.0
1.6 0.2
4.8 4.0 2.9 2.1
0
LESCO MEPCO FESCO PESCO IESCO GEPCO QESCO HESCO SEPCO TESCO KE

Unit Sold Losses

FY22 Actual vs. Allowed Losses (%)

15.9% 17.5%
40% 20%

11.0%
7.9%
37.2%

35% 10%
35.6%

2.4%
-0.2% -0.2% 0.0% -0.4% 0.0% -0.7%
30% 0%
28.1%

27.4%

25% -10%

20%
21.3%

-20%
19.5%

18.1%
17.2%

15% -30%
16.0%
15.3%
14.9%
14.7%

10%
11.5%

-40%
9.5%
9.3%

9.3%
9.3%
9.1%
9.1%

9.1%
8.2%
8.2%

5% -50%

0% -60%

LESCO MEPCO FESCO PESCO IESCO GEPCO QESCO HESCO SEPCO TESCO KE

Actual Allowed Breach

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 Transmission & Distribution | Electricity – Jan’23

In FY22, DISCOs connected with the CPPA-G system booked average line losses of ~17.1% against an
average allowable limit of ~13.8% with an average breach of ~4.8%. While KE booked no line losses for
the same period. The estimated cost of these losses stands at PKR~123bln.

Total Units Billed Per Category (GWh)

120%
11,962 11,529
25,071
19,202 15,919
10, 000

100% 4% 2% 0% 2% 0% 4% 0%
1%
3% 5%
(10,00 0)

6% 2% 1% 17%
7% 7% 2%
9% 5%
5% 19% 1% (30,00 0)

80%
9%
24%
11% (50,00 0)

37%
60% 39% 18% 0%
14% (70,00 0)

40% (90,00 0)

59%
53% (110,0 00)

46% 48%
20% 41%
(130,0 00)

0% (150,0 00)

LESCO MEPCO FESCO IESCO GEPCO

Domestic Industrial Agricultural Commercial Bulk Supply Public Lighting Others Total

Total Units Billed Per Catagory (GWh)

120%
10,355
4,832 4,035 2,890 2,072 10, 000

16,763
100% 5% 0% 5% 0% 4% 3%
6% 0% 1% 1% 3% 0% (10,00 0)

7% 3% 3% 7%
3% 7% 0% 11%
8% 5% 8% 26% 1% 1%
80%
(30,00 0)

1% 3% 0%
1%
24% 23% 14% (50,00 0)

35%
60%
(70,00 0)

73%

40% (90,00 0)

71%
57% 62%
55% (110,0 00)

48%
20%
4% (130,0 00)

12%
0% (150,0 00)

PESCO QESCO HESCO SEPCO TESCO KE

Domestic Industrial Agricultural Commercial Bulk Supply Public Lighting Others Total

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 Transmission & Distribution | Electricity – Jan’23

Amount Billed & Recovered (PKR bln)

700 100 %

97% 98% 97%

95% 96% 90%

600 92% 92%

587

74%
80%
568

500 66%
64%
70%

60%

400
401

390
377
50%
369

367
348

300
35% 40%
290
277

253
248

234
30%

200

214
20%

100

97
10%

89
34

66

63
40

43
29
- 0%

LESCO MEPCO FESCO IESCO GEPCO PESCO QESCO HESCO SEPCO TESCO KE

Amount Billed Amount Recovered %age Recovery

Other than distribution line losses, non-recovery of billed amounts from consumers for the DISCOs in the
CPPA-G system stood at ~9% and at ~3% for KE in FY22. The cumulative cost of non-recovery stood at
PKR~243bln.

Wgt. Avg. Unit Price (PKR/kWh)

30
34% 36%
26% 50%

8% 8% 65% 9%
4% 2% 3% 5% 3%
25
0%
24.24

23.43

23.28
23.18

23.04
22.65
22.56

22.51
22.47
22.03
21.94

21.87
21.85

20
21.55
20.94

20.87
20.71

20.33
19.98

-50%
19.21

15
16.24

-100%
13.95
13.87

10 -150%
7.05

5 -200%

0 -250%

PESCO TESCO IESCO GEPCO LESCO FESCO MEPCO HESCO SEPCO QESCO CPPA-G KE

Billed Recovered %age Loss Per Unit

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 Transmission & Distribution | Electricity – Jan’23

DISCOs inefficiencies and delayed tariff adjustments collectively make up around ~65% of the circular
debt stock. Almost ~64% of the circular debt stock is payable to IPPs. The cost of generation for FY22
stood at PKR~15.50/kWh, however after adjustment of ~19% T&D losses, generation cost per unit stood
at PKR~19.13/kWh; while average amount recovered per unit sold stood at PKR~18.59/kWh.

Circular Debt and IMF Review

Circular Debt (PKR bln)

2,500 2,280 2,253
2,150

2,000
1,618 930 800
1,007
1,500
1,127
806
1,000
583
1,350 1,452
500 1,143
812
544
0
FY18 FY19 FY20 FY21 FY22

CPPA Payables PHPL Payables

Causes: Long standing deficiencies in terms of delayed tariff adjustments, unbudgeted subsidies, weak
operational and administrative controls, line losses in excess of ~16% and bill collection losses in excess
of ~4.6% on distribution network’s part have collectively led to unsustainable levels of circular debt in the
power sector.
IMF in its latest review has mandated stringent power sector reforms, aimed at mitigating the power sector
deficiencies by:

• Replacing blanket subsidies with targeted ones through Benazir Income Support Program
• Removing power subsidy to the export-oriented sectors.
• Bridge the power sector gap of PKR~950-1000bln via increased base tariffs and timely tariff
adjustments.
In FY22, circular debt stock stood at PKR~2.25tln after decreasing by PKR~27bln due to payments of
PKR~564bln to the IPPs. Volatile international energy commodity prices are expected to keep the costs of
generation high which has led to a rise in circular debt historically. On the contrary, in its on-going 9th
review, IMF’s stringent conditions to arrest the rising misnomer of circular debt may keep its growth in
check. Nevertheless, measures like increase in base tariffs and removal of blanket subsidies are ultimately
going to impact the end-consumers with rising costs of electricity. This may lead to greater risks of
recoveries for the distribution sector.
The IMF in its previous review (i.e., 8th) also recommended medium term cost reducing structural reform,
these include:

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 Transmission & Distribution | Electricity – Jan’23

• Renegotiation of PPAs in return for clearing up-to PKR180bln unguaranteed CPPA-G payables via
10-year floating PIBs and 5-year sukuks
• Converting PHPL government guaranteed debt to public debt.

Bibliography Contact us | PACRA Research

Saniya Tauseef – Manager
Pakistan Economic Survey
[email protected]
State Bank of Pakistan
Usman Sarwar – Research Analyst
NEPRA – State of the Industry Report – FY22
[email protected]
NEPRA – Performance Evaluation Report – 2021
Asian Development Bank

DISCLAIMER
PACRA Research has used due care in preparation of this document. Our information has
been obtained from sources we consider to be reliable but its accuracy or completeness is
not guaranteed. The information in this document may be copied or otherwise reproduced,
in whole or in part, provided the source is duly acknowledged. The presentation should
not be relied upon as professional advice.

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