CIRCULAR DEATH OR DEBT
Despite clarion calls from concerned quarters, Pakistan’ energy sector’s circular debt is rising beyond the reach of the aspirants to pay through available resources. Needless to say that the continuous rise of the circular debt threatens energy security and social welfare. Currently it stands at an all-time high of 5.2pc of GDP. Circular debt has stood on to an unprecedented level of circular debt amounting to Rs2.3 trillion. The average cost of every produced unit of electricity is not less than Rs 21 while the government sells it to consumers @ Rs 14 – with a Rs 7 deficit per unit. There are multiple causes of rising circular debt such as Tariff Differential Subsidy, Capacity Payments, T&D and Recovery Losses, and Governance Issues. The present government’s resolve to alleviate the circular debt by adding and enhancing the role of green energy into the national energy mix is yet to be materialized. Conversely, the share of renewables in the energy mix has decreased, as opposed to rising as per the PTI manifesto.
The previous government which started its tenure in 2013 gave a surprise to all by announcing the payment of circular debt at the beginning of its tenure. At that time the amount of circular debt was not less than Rs480 billion and the government had nothing in the treasury in the name of circular debt payment. However, the then Finance Minister of the PMLN government managed the amount and paid the circular debt to the Independent Power Producers at the cost of some development funds. So far so good. Common sense which remained the most uncommon in power corridor demands that this practice should not have been revived at any cost.