Government urged to resolve issue of inter corporate circular debt in power sector

Islamabad: The Pakistan Economy Watch (PEW) on Sunday asked the government to resolve issue of inter corporate circular debt in the power sector which has become a big threat to image and economic survival of the country.

Liquidity crunch in the energy sector has hurt economic growth, hit exports, reduced collections, triggered unemployment and stalled fresh investment in power generation, it said.

The circular debt is also barring investment in Thar where lies the key to energy security of Pakistan, said Dr. Murtaza Mughal, President PEW.

This issue cannot be left unresolved which can push international credit rating agencies to cut Pakistan’s rating which will be an irreparable loss, he warned.

He said that so far government has not initiated any effective plan which can help settle the issue.

Dr. Murtaza Mughal said that government has tried to counter the Rs 400 billion circular debt through load shedding which has inflicted loss of around 400 billion to industrial sector over the last year and a half.

The faulty strategy has pushed up production cost by 30-40 per cent, reduced production capability, cut textile output by 33 per cent, and left small businesses reeling, he observed.

He said that the controversial load management plans have brought growth down and triggered mass unrest as well as unemployment.

It has pushed debt to GDP ratio to 59.3 per cent, 4 per cent up since Musharraf left Pakistan. It was 79 per cent of the GDP during Nawaz’s rule.

Dr. Murtaza Mughal said that main culprits responsible for the situation are federal and provincial governments but masses are being made to pay for it.

He said that a country blessed with vast natural resources is facing the situation due to incompetence and mismanagement of the concerned officials. Poor governance on the part of rulers is compounding the energy crisis, he added.

Policy failures continue to take toll on economy while leaving masses deprived and marginalised while political misfortunes have left rulers with little focus on reforms, said Dr. Mughal.

Country will have no future unless effective management, curtailing thefts, initiating new hydroelectric projects, revisiting energy mix, enabling environment and most importantly Thar coal reserves are exploited, he warned.

For more information, contact:
Dr. Murtaza Mughal
Pakistan Economy Watch
402, 4th Floor, Gulistan Khan House, Fazal-e-Haq Road,
82-East, Blue Area, Islamabad
Tel: +9251 251 0375
Fax: +9251 280 2449
Cell: +92321 515 7671

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