Pakistan Institute of Development Economics


Circular Debt – An Unfortunate Misnomer

Date : June 25, 2020 at 03:00 PM.
Moderator: Dr. Nadeem ul Haq (Vice Chancellor PIDE)
Speaker : Shahid Sattar Former Member Energy Planning Commission, Ermeena Malik, Renewable Energy, Consultant, World Bank, Tahir Basharat Cheema Former MD - PEPCO,
Discussant : Syed Akhtar Ali, Former Member Energy, Planning Commission, Younas Dagha, Former Secretary, Ministry of Water and Power, Waqas Bin Najib, Member Energy, Planning Commission, Afia Malik, Senior Research Economist, PIDE, Amer Durrani, President, Reenergia, Vaqar Zakaria, Partner & Director, Hagler Bailly Pakistan, Rashid Aziz, Senior Energy Specialist, World Bank

Circular debt is a power sector deficit; shortfall in inflows and outflows at the CPPA-G. It is because of inefficiencies, delays in tariff determination/ decision-making, taxation issues, administrative and governance issues. It is huge and increasing as there is no serious effort to curtail it. The only effort government made over the years is to increase consumer tariff; which in itself is distortionary. Uniform tariff and subsidies act as a disincentive for DISCOs to improve efficiency. Instead of increasing sales to minimize the impact of huge capacity payments, DISCOs have started revenue-based load shedding. There are no performance contracts with energy companies.