IN his first budget speech in June 2013, then finance minister Ishaq Dar gave an assurance to the country that the circular debt of the power sector, which had just been retired in a massive exercise of almost Rs500bn, would not be allowed to return. “[It] is imperative that we must do all that is needed to stop its recurrence in the future,” he had said in his budget speech, after outlining the huge proportions that the problem had assumed by the time he had taken office. He hailed as “historic” the decision by his government to settle the entire debt in one go, an exercise to ensure “that every available and economically viable source of power could be brought on line”. Eliminating load-shedding and preventing the return of the circular debt were two central pillars of the new government’s promise to the country, and for a while at least, it seemed like they were on their way to accomplishing both. Load-shedding has indeed been controlled, if not fully eradicated, and up till late 2015 or so, the circular debt was also kept restrained as some improvement in power-sector recoveries took place due to new billing reforms.

But it all began to unravel rather quickly. Today, the circular debt is beyond the levels it was at when the government came to power, and it is only a matter of time before it begins to jam the turbines of the power sector once again. It all depends on how one defines the circular debt, but one recent report in this newspaper shows that it could be as high as Rs922bn, making it almost double the size it was when the government took the reins of power. More megawatts mean stronger billing and recovery to plug the leaks. That is not happening though. All the policy emphasis of the government has been on mega projects, adding more power plants, and hardly any on reforming the power sector so it can handle the additional power without running into severe liquidity issues. With its rapid pace of accumulation, it is possible for the circular debt to once again choke the power sector. If that happens in the days leading up to the election, the debt will not be the only thing that will be circular. The government’s journey from its first day to its last would also have come full circle.

Published in Dawn, March 20th, 2018