Dirty power games

Circular debt. 

You are right, this piece is about the power sector's inefficient financial management. 

The power sector shows its immense power with ill planning. 

From the issue of generation to transmission and distribution and power bills collection, it is full of stories of incompetence and poor planning. The menace of circular debt is a new addition to the piles of problems, the power sector has been into for the last one decade. No one has any clue to circular debt – where it comes from and how to tackle it. Recently, Public Accounts Committee (PAC) members took up the issue of circular debt and grilled the Ministry of Energy gurus. During the previous Pakistan Peoples’ Party (PPP) regime, the issue of circular debt often hit the headlines. 

From 2010-2013, the then government dragged the issue, defaulting on payments date after date until the new government was installed. Nothing was said on the record by the PPP government on defaulting moves, but behind the scene talks leaked to the media suggested that the government wanted a forensic audit of the payments, which the independent power producers refused to do so.

Then came the government of the Pakistan Muslim League-N (PML-N), which within months of its inception, retired the debt – Rs450 billion – without any audit or inquiry. Soon, the oil prices were at their lowest, and side by side, the government withdrew subsidies on the power bills, increasing the power tariff substantially to rationalize accounts books. Several power projects were commissioned to increase generation. Now, again we hear that despite low oil prices and high power tariffs, the astounding figures of circular debts - Rs450 billion - have been pestering the power corridors for the last two years. Some reports suggest that the figures have crossed Rs450 billion.

Like their predecessors, the PML-N government seems to drag the issue until the general elections which are likely to be held in mid-2018. The new government will inherit the Rs450 billion circular debt. That is a sign of bad government. Why did the government not try to investigate the issue?. Why did the debt pile up despite low oil prices and high power tariffs? And why so quickly? The previous government claimed that they had inherited the circular debt, whereas when the PML-N government cleared the amounts in late 2013, it had promised that transparency and efficient management would be followed in the power sector to end power cutouts and circular debt. The government failed on all promises.

Several serious financial issues are bleeding the power sector. The PAC also took up the issue line losses that stand at Rs200 billion per year, whereas Rs214 billion megawatts are stolen every year. The PAC told the ministry to take up the issue of circular debt in the cabinet. Why only cabinet? It is the time that issue of circular debt be taken up in Parliament, think tanks, research bodies and judicial and investigation commissions. It is probably the best time to find out the hidden hands piling up debts for their vested interests. We have heard that several independent power producers wield influence in the power corridor and have the ability to influence to power policies of the government. Once such example is the commissioning of additional projects, which would result in surplus megawatts in the coming months.

Unit by unit, the nation is being sucked by the power producers and power players. It is time to give them the shock of life.