A Systematic Study of Pakistan’s Circular Debt to Determine a Pathway for Immediate, Medium-Level and Long-Term Directives to Curb its Burgeoning Volume /

Abstract

Circular Debt continues to mount in Pakistan and its burden is becoming a national crisis. Multiple academics and governmental organizations have tried to curb its growth but no interventions have yielded meaningful and sustainable results so far. However, a solution or a formula to retard its growth is essential as the energy sector of a nation must be robust and efficient. In this study, the causes and possible solutions of circular debt are studied in great detail. From the accumulated data, important variables that contribute to its financial, administrative, and technical dimensions have been isolated. Consequently, three prospective time-sensitive action areas that outline immediate, medium-level, and long-term engagement have been presented. This study aims to thoroughly outline the way Circular Debt encompasses power generation, transmission, distribution, and utilization in the country. For the purpose, a systematic review of literature as it relates to the subject matter has been carried out. The findings show that it is a structural issue with administrative, financial, and technical causes. In the financial aspect, it is due primarily to the increase in global fuel prices and electricity theft. In the administrative sector, it can be attributed to inefficient policy planning and implementation, DISCOs facing problems in recovering dues, delays in consumer tariff updates, poor governance/cyclical political influence on governmental policies, and lack of long term vision. The technical issues include insufficient reliance on renewable energy, ineffectively targeted electricity, and the country’s burden of providing subsidized rates for electricity.