Unbridled circular debt  


A meeting of the Cabinet Committee on Energy was informed on Thursday that the power sector’s circular debt went past Rs. 2.306 trillion as of Nov 30, 2020, up by Rs. 156 billion over the first five months of the current fiscal year, at a rate of Rs. 31.2 billion per month. It was noted that Rs.156 billion addition in circular debt included non-payment of budgeted and unbudgeted subsidy, delayed payments on account of interest to independent power producers (IPPs), other mark-ups, pending price adjustment on account of quarterly and monthly adjustments and non-payments by K-Electric.
That the circular debt is mounting with the passage of time despite the fact that the Power Division claims to be implementing a ‘circular debt management plan’ is indicative of irrelevance of the plan with the ground realities. This is mainly because instead of addressing the real causes, the focus so far has been on increasing the electricity tariff, which compounded woes of all consumers. Line losses and theft are the major factors but no worthwhile investment is planned on improvement of the transmission and distribution system. The world over all systems are upgraded when new and better technologies and equipment are available but in our case the structure is left to rot as we have also seen with reference to Sui Gas and Pakistan Railways. It is not an exaggeration to say that the corruption mafia is so powerful that it is opposing moves to modernize the system and introduce transparency. The revelation of Ministry of Information Technology that a public sector company has developed a (meterless) smart metering system which has effectively been tested in Military Engineering Services (MES) Rawalpindi and Peshawar Electric Supply Company (Pesco)” but it is not being implemented by Discos for reasons known to them, speaks both about the potential to address the issue of technical losses and theft to a great extent and resistance to fair solutions. The locally developed system is said to be much cheaper than similar systems in other countries. The system should thoroughly be checked for its efficacy and introduced without further delay if it is really a sound one.

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