ISLAMABAD: Lahore Electric Supply Company (Lesco) posted a staggering net loss of Rs45.38 billion while Hyderabad Electric Supply Company (Hesco) recorded losses of Rs12.90 billion during FY2024-25, as Pakistan’s power distribution sector continued to grapple with severe financial stress, reveals the AGP report 2025-26.
Hesco’s accumulated losses surged to Rs513 billion, while Lesco’s losses reached Rs331.20 billion, eroding its equity to a negative Rs174.95 billion and raising doubts about its ability to continue operations without government support, latest audit disclosures revealed.
In contrast, Faisalabad Electric Supply Company (Fesco) and Islamabad Electric Supply Company (Iesco) showed signs of improvement during FY2024-25. Fesco reported a net profit of Rs9.43 billion, up sharply from Rs998 million a year earlier, while Iesco reduced its annual loss to Rs1.42 billion from Rs15.80 billion in FY2023-24 through improved operational efficiency and stronger recoveries. The audit reports show that Lesco, Hesco and Mepco remain among the most financially vulnerable distribution companies due to massive accumulated losses, weak liquidity positions and rapidly growing employees’ retirement benefit liabilities.
Although, Multan Electric Power Company (Mepco) managed to earn a profit of Rs5.26 billion, it remained burdened by accumulated losses of Rs174.56 billion and negative equity of Rs76.72 billion, prompting auditors to classify its financial sustainability as unsatisfactory.
Fesco emerged as the strongest performer among the reviewed distribution companies, posting a net profit after tax of Rs9.43 billion compared to a profit of just Rs998 million in FY2023-24. The company increased its billed revenue to Rs470.12 billion while benefiting from lower electricity procurement costs. The improvement enabled Fesco to restore its total equity to a positive Rs62.97 billion by June 2025 following current-year profits and capital restructuring measures.
Iesco significantly reduced its losses, reporting a net loss of Rs1.42 billion compared to Rs15.80 billion in the previous fiscal year. Revenue rose to Rs331.07 billion, while operational performance improved through lower transmission and distribution losses and stronger recovery of receivables. However, accumulated losses continued to weigh heavily on the company’s finances, eroding equity to Rs133.69 billion.
According to the audit findings, Fesco’s operational efficiency improved considerably, with debtor turnover days declining to 65 days from 108 days recorded in FY2021-22. Total receivables also fell slightly to Rs82.08 billion, while cash generated from operations reached Rs15.05 billion. Nevertheless, the company remained exposed to significant long-term liabilities, particularly employees’ retirement benefit obligations amounting to Rs122.85 billion.
Iesco likewise demonstrated stronger operational performance. Transmission and distribution losses declined to 8.39 percent in FY2024-25, moving closer to regulatory benchmarks set by Nepra. Collection efficiency improved substantially, reducing debtor turnover days from 155 to 55 over the past five years. The company generated Rs44.62 billion in cash from operations, although rising retirement benefit liabilities of Rs109.74 billion and persistent liquidity constraints continued to pressure its financial position.
Lesco’s financial indicators remained alarming. The company posted a negative net profit ratio of 6.87 percent and faced a working capital deficit, with current liabilities exceeding current assets by Rs92.45 billion. Staff retirement benefit obligations reached Rs176.09 billion, adding to the company’s long-term financial burden. Auditors consequently issued a qualified opinion on the utility’s financial statements.
Mepco reported revenues of Rs524.06 billion and maintained a relatively strong collection cycle, recovering dues within 34 days on average. The company also reduced transmission and distribution losses from 14.95 percent to 13.33 percent. However, these losses remained above Nepra’s target of 11.34 percent. The utility continued to rely heavily on government subsidies totaling Rs80.12 billion, while employee retirement benefit obligations increased to Rs177.14 billion.
Hesco remained the most financially distressed entity among the companies reviewed. The utility recorded a critically weak current ratio of 0.25 and faced severe liquidity pressures, with creditor payment periods stretching to nearly 800 days. Employees’ retirement benefit liabilities rose to Rs102.98 billion and remained entirely unfunded, posing a serious threat to the company’s long-term solvency.
The audit reports indicate that while Fesco and, to a lesser extent, Iesco achieved measurable improvements in profitability and operational efficiency during FY2024-25, the broader power distribution sector continues to face significant financial sustainability challenges driven by accumulated losses, liquidity shortages, pension liabilities and dependence on government support.
