Pakistan’s Total Energy Sector Circular Debt Reaches Rs 5,286 Billion
ISLAMABAD: Official data and reports indicate the circular debt of Pakistan’s energy sector has reached an alarming figure of Rs 5,286 billion.
The gas sector has the highest circular debt of Rs 3,611 billion, followed by the power sector with a circular debt of Rs 1,675 billion, according to official data. The figure shows that the balance of the gas sector ‘s liabilities is far greater compared with the power sector. The International Monetary Fund (IMF) has highlighted financial pressures and structural vulnerabilities in Pakistan’s energy sector, calling upon the government to take prompt measures to create a financially stable energy sector through structural reforms.
The world’s largest lender underlined the need for timely adjustment of tariffs and radical cuts in operating losses to prevent a ‘circular debt’ from spreading. Continuous flow of power and gas sector liabilities are key economic issues facing Islamabad.
The government has pledged to further cut the inflow of circular debts and cost-reflective tariff regimes, but international financial institutions have cautioned of unaddressed vulnerabilities in the energy supply chain continuing to pose threats to the country’s macroeconomic stability.