Catching bull by its horns

The frequent doses of hiking power tariff neither worked in the last PML-N government nor does these fiscal measures helped tam the hydra-headed monster of circular debt in the present government. The debt has swollen to R.1.96 trillion. National Electric Power Regulatory Authority (NEPRA) has rejected the claim of power division to have reduced the month-on-month increase in circular debt from Rs.30 billion to 17 billion. The reluctance that ECC showed for approving power tariff of 7.5 cents per unit to export oriented industries vindicated NEPRA assessment of circular debt.

International Monetary Fund has asked for third party audit of the fast bulging circular debt. But the global lending agency does mean a post audit by an independent chartered accountancy firm, rather it wants this job to be done by those specialized institutions with rich expertise of pre and post audit matters of energy sector chronic issues which have been accredited by the World Bank and the Asian Development Bank.

The factors that are responsible for the recurring circular debt and that too of greater magnitude include idle capacity payment charges to IPPs, massive running default of electricity bills by influential, political and business elite, provincial governments and federal government departments and huge technical losses of transmission and distribution system. The IPPs cartel is so powerful that since coming into operation of private thermal power plants a single audit of electricity generation cost has not been done. Instead the cartel was rewarded by the last PML-N government by indexation of thermal power tariff with the US dollar. Hence, IMF condition of a third party audit of circular debt amounts to catching bull by its horns.