THE escalation of the power sector’s circular debt has assumed alarming proportions, which has now reached a staggering Rs2.393 trillion. It has far-reaching implications for both consumers and the national economy, but seemingly the government remains insensitive to the issue.
It is worth recalling that in March last year, the relevant minister had assured at a press conference that the circular debt, then at Rs2.31 trillion, would not increase by the close of the 2023-24 fiscal. However, within months, an additional Rs90 billion was added, casting doubt on the credibility of such political statements.
The broader energy sector’s circular debt has now reached unprecedented levels, standing at Rs5.422 trillion.
This includes Rs2.393 trillion in the power subsector, Rs2.866 trillion in the gas subsector, and Rs163 billion in the petroleum subsector. The mounting circular debt has become a persistent threat to the country’s financial stability, economic growth, and energy supply chains.
Its ripple effects extend across the economy, placing an enormous financial strain on consumers. Despite the government’s repeated efforts, the circular debt crisis remains unaddressed in any meaningful way.
Multiple initiatives to curb the rising power sector debt have failed to deliver results. A plan developed by the caretaker government was never implemented.
The chronic issue stems from various factors, but the root causes lie in lax governance and gross mismanagement.
Regrettably, these systemic issues continue to go unaddressed, perpetua-ting a crisis that threatens to derail the nation’s economy further.
Hussain Ahmad Siddiqui
Islamabad
Published in Dawn, February 3rd, 2025
