President Pakistan Businessmen and Intellectuals Forum (PBIF), President AKIA, Senior Vice Chairman of the Businessmen Panel of FPCCI and former provincial minister, Mian Zahid Hussain on Friday said circular debts have clutched the national economy; with increase of Rs. 200 billion in just 6 weeks of the newly formed government, circular debts have reached $ 11 billion Rs. 1400 billion, equivalent to $ 11 billion, according to the report of senate committee for the circular debt.
With constant increase in the circular debts, the energy sector is badly affected in addition to the foreign investment. Early reforms are required to curb the increasing circular debts.
The veteran business leader while talking to the business community said that unlike developed countries Pakistan’s energy sector is based on obsolete and outdated system of transmission and distribution, which has caused 24 percent line losses while average electricity theft is 12 percent. Estimated line losses of only AJK, Baluchistan, KPK and Sukkur & Hyderabad of Sindh province are said to be Rs. 130 billion annually. Circular debts have increased by Rs. 132 billion annually. Though the previous government has paid off Rs. 480 billion of the circular debts at the start of tenure, but in the last five year with increase of Rs. 656 billion, the same has reached to Rs. 1200 billion till the formation of current government. Rs. 640 billion of energy sector while Rs. 150 billion of gas are liable in term of circular debts. Delay in payments of these liabilities further worsening the situation of energy sector.
The former minister said that the energy production capacity has increased by 9 thousand megawatts during the tenure of previous government but the system of transmission and distribution of energy, billing recovery, infrastructure development and electricity theft could not be developed. If instant measures are not taken, the situation will get worse. In 2013 the main source of energy production was imported oil but over the years the sources of energy production have changed and now 35 percent of is produced through oil, 29 percent through gas, 29 percent through hydro, 9 percent through coal and 6 percent through nuclear energy. The world is opting cheaper sources of energy production thus providing cheaper energy to their industry which further improve their economy.
Mian Zahid Hussain said that the main causes of circular debts are line losses, electricity theft, delay or denial of payment of subsidies by government, outdated system of energy transmission and distribution and least interest of provinces in the energy sector. Better alternate to the obsolete transmission system is required in order to curb the line losses. It is important to improve the electricity production capacity but given to the current situation it is more important to save the line losses and electricity thefts. It is also important to opt cheaper and environment friendly ways of electricity production including hydro and thermal.