The circular debt has swelled to Rs211 billion in the first four months of the current fiscal year, as the underlying problems remain unresolved. Only in July, the government had cleared an outstanding amount of Rs503 billion.

However, Finance Minister Ishaq Dar says the goverment will adhere to this year’s circular debt ceiling of Rs250 billion.

While clearing the liabilities, the government had claimed to make a serious effort to bridge the difference between the cost of electricity generation and distribution, and the tariff. Moreover, bill collection was to be improved and energy theft was to be controlled to avoid future increase in the circular debt. All of this doesn’t seem to be happening.

The PML-N government’s apparent focus was on eliminating the circular debt altogether, which, it believed, would reduce load-shedding in the country. But an earlier World Bank report had presented a different view on the power crisis.

“It must be stressed that the circular debt is a symptom of an inefficient and unsustainable energy system that can only be addressed once the underlying causes have been resolved; otherwise it would just re-emerge,” said the WB report.

The World Bank report came almost one month ahead of the PML-N government’s energy policy, but the underlying causes have not been addressed so far.

The Bank had recommended that the ministry of water and power and the ministry of petroleum be merged into a single ministry of energy. The merger of Nepra and Ogra to form a single energy sector regulator was also proposed.

Currently, a small group of experts are actually running the power ministry, who are not responsible to Federal Minister for Water and Power Khawaja Asif, but to Punjab Chief Minister Mian Shahbaz Sharif. Adviser to prime minister on water and energy Dr Mussadaq Malik and former finance minister Shaukat Tareen were tasked to suggest policy measures. The prime minister’s nephew Abid Sher Ali, a state minister, is also involved in decision making.

Another failure of the present government is the non-recovery of electricity bills, with public sector dues — at Rs190 billion — causing a deep cash flow deficit. The government has yet to work out an effective strategy for recovering the outstanding amount from government departments.

The theft in the distribution system — reckoned at about Rs100 billion — is not a real-time reliable figure, because no meters are installed at the entry and exit points of distribution companies.

A power expert says it is difficult to segregate the real excess distribution technical losses and theft. In the absence of a metering tree, he said, another way of ascertaining power theft is to carry out a technical audit of all distribution networks. However, this is resisted by ‘vested interests’.

The PML-N government has yet to take a decision on audit of all distribution networks to ascertain the actual power theft and losses to the national exchequer.

Similarly, the government should get independent financial audits carried out of all distribution companies to verify their billing processes and to detect any over billing or parking of units.

Like the previous government, the present one is also hiking electricity tariffs to raise additional revenue, instead of recovering overdues and minimising theft and improving governance.