Proposals for Overcoming Power Sector Circular Debt

Dear Prime Minister of Pakistan,

I am writing to you today to offer some suggestions on how to effectively control the issue of power sector circular debt in Pakistan. This issue has been a long-standing problem for the country, and it is time to take action to address it, before it knocks down our foundations of already fragile economy.

Firstly, one of the most important steps that can be taken is to improve the efficiency of the power sector. This can be achieved by reducing line losses and improving the collection of dues from consumers. The government should take measures to incentivize power distribution companies to improve their performance in these areas.

Secondly, the government can consider introducing a subsidy for the low-income population, which can help reduce their burden of electricity bills. This can be achieved by creating a separate fund (or using BISP) which can be used to subsidize the bills of those who are genuinely unable to pay for electricity.

Thirdly, it is important to diversify the energy mix in Pakistan. This can be done by exploring (through a crash program) alternative sources of energy such as solar, wind, and hydro power. These sources of energy can help reduce the reliance on fossil fuels, which are expensive and also contribute to environmental pollution.

Fourthly, it is crucial to ensure transparency and accountability in the energy sector. The government can take steps to promote transparency by introducing mechanisms that allow for independent monitoring of power sector operations with particular reference to the IPP’s.This can help to identify and address any corrupt practices that may be contributing to the circular debt problem.

Lastly, the government can also consider negotiating with international organizations to secure funding for the energy sector. This can help reduce the burden of debt and allow for much-needed investments in the sector. In addition, the government can work on improving the country’s credit rating, which can make it easier to access international funds at more favorable rates.

In conclusion, the issue of power sector circular debt is a complex problem that requires a multifaceted solution. However, with a comprehensive approach that includes the steps outlined above a start can be made towards the right direction.

Sincerely,

Syed Nayyar Uddin Ahmad
03219402157
Lahore.
21 February 2023.