The circular debt and power crisis are interlinked issues that cannot be resolved unless all the stakeholders, consumers, power generation and distribution companies and the government decide to adamantly resolve them in a comprehensive manner.
The problem of inter-corporate circular debt has turned out to be a chronic one. It has gravely affected the power generation capacity available in the country. It arises because a number of public sector commercial entities such as Pakistan Railways, Pakistan International Airlines (PIA), Pakistan Steel Mills (PSM) and provincial and federal government departments are in default on payment of huge electricity bills running into billions of rupees.
The government should take the following measures in this respect:
Outstanding bills of consumers of all sorts should be realised within four months through monthly installments. Outstanding bills of public sector enterprises, provincial and federal governments, should be deducted at source. Henceforth, payment of bills should not be withheld by them on one pretext or the other.
Austerity measures decided by the federal government should be implemented in letter and spirit to reduce the over consumption of electricity.
Government should take measures to reduce the cost of furnace oil for production of comparatively less costly electricity as an incentive for timely payment of bills by big consumers.
Theft of electricity and line losses should be reduced from 40.0 per cent to a lower percentage.
Government needs to review its policy of paying-off the circular debt by floating TFCs that create liquidity crunch for commercial banks. Instead, the power sector should be made self-reliant and self-sustaining. The three major stakeholders in the power sector; PSO, Pepco and IPPs should make genuine efforts to keep their accounts free of outstanding bills as much as possible.
Resolving the problems of outstanding bills is the key to end the circular debt issue and to generate maximum power generation to end electricity outages that have adversely affected normal life and all sectors of the economy.
FARHEEN ASHFAQ
Karachi
