Pakistan's economy bears additional burden from circular debt of power sector amid financial challenges

Islamabad [Pakistan], February 12 (ANI): The Imran Khan government like its predecessors has not been able to stop Pakistan's power sector from continuously bleeding cash as the country's circular debt of the power sector has been gathering girth since 2007, and to date, all the regimes that followed fell on their rusty swords trying to slay this monster, reported local media.
The current government is no exception as it also has been unable to stop the power sector -- one of the most stymieing burdens on the country's economy -- from continuously bleeding cash as a result of it. The elimination of this monster requires in-depth analysis to ascertain its exact causes before fixing it once and for all. There's a gap between the cost of power generation and full recovery of revenues because of different inefficiencies in the power sector, reported The News International.
The National Electric Power Regulatory Authority (NEPRA), the regulator, has allowed 17 per cent losses as part of the tariff structure; losses beyond 17 per cent become part of the circular debt. The average line losses stand at 25-30 per cent on account of different heads, which ultimately become part of the circular debt, said the Pakistani publication.
The recent power tariff hike is the most worrisome measure to fix the issue.
Pakistan's governments have mostly failed to undertake much-needed structural reforms that require curtailing leakages and improving efficiency with strong governance. Without creating an overall competitive market, Pakistan's power-sector issues cannot be fixed, according to The News International. (ANI)