Circular Crisis

As has been the case for many years, and indeed decades, circular debt, notably in the energy sector, remains a major problem for Pakistan. The prime minister has conceded that this is indeed the case and it is one of the causes of grave concern for him, especially as he feels that all the figures given to him have not been accurate. We must learn to project accurate and correct figures so that the government can collectively deal with the problem and that these figures are available to the cabinet for assessment and policymaking. Currently Pakistan’s circular debt stands at around Rs2400 billion. This number has to be brought down. One of the problems has been that demand has not risen as quickly as supply in the country. One of the reasons for this is the slowdown in industrial growth, which was being experienced even before the Covid-19 crisis.

In 2015 deals were made with Chinese power companies which were asked to provide more electricity than the country could consume. At present, there is an attempt to turn back or alter the nature of these agreements, which were a part of the CPEC deal. In addition, there have been mishaps and mistakes in the purchase of the energy and its use. The policy of collective punishment or loadshedding to punish those industries from which elements are stealing electricity in effect acts as a punishment against all industries and further impedes their ability to reach the production goals they have set for themselves. This policy needs to be changed. The question raised before on Geo TV, of why expensive furnace oil was purchased in July when cheap LNG was available and could have been used by both K-Electric and PSO, remains a mystery that we must solve. It can simply not be justified and has cost the country billions of rupees. Circular debt continues to take its toll, even after years of effort. The projections made in the past, including by members of the PTI government as to how much circular debt would go down from one segment of the year to the next, have not proved accurate. For example, circular debt is likely to remain higher in January 2021 than had been put forward by those running the energy sector and advising the prime minister on it.

Energy is essential to meet any country’s demands. We need to see an increase in the use of energy and its efficient use at all levels in the country, whether it be by domestic consumers using air conditioners and other electronics, or by industry. The provinces also need to play their part alongside the federal government. Currently, major losses are being experienced in Peshawar, Quetta and the former Federally Administered Tribal Areas in the energy sector due to mismanagement and inefficiency. The provincial government needs to tackle this, and the problem as a whole needs to be addressed by all provinces and the centre collectively.

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