Summers to heat the circular debt

It is summer time - well almost - and on the energy front Pakistan stands where it stood two years back. Consistency seems to be the governments most-loved word when it comes to the energy sector woes and the fast approaching summers threaten to make the woes, even more woeful. As was feared, the inter-corporate circular debt has made the headlines again, forcing the economic mangers of the country to meet soon.
It will be no good if the meeting ends with yet another ad-hoc measure of injecting a few billion rupees in the state-owned oil marketing company to keep it alive on the ventilator, only to see it going back to the ICU in a months time.
This was exactly the case last month, when the government decided to inject Rs30 billion in the system - these columns highlighted the fear that it would not be more than a couple of weeks and the problem would rise again - and so it has.
What is unfortunate and what is increasingly becoming annoying, is the fact that the root cause behind the energy crisis remains largely unaddressed. Tariff rationalisation is vital but it alone will not and cannot solve the matter. Even the tariff rationalisation may not be that easy for the government as the international oil prices have heated up after the Arab unrest and the quake in Japan.
The government will have to pass on more than just the 2 percent increase in electricity tariffs, as the fuel adjustment portion will require major hike in power tariffs in an economy where the energy mix continues to be in favour of oil-based power generation. However, knowing that the government, which has been living on a thin edge lately, had to reverse almost every bold decision in the past four months or so, one can be too sure about the tariff hike.
It is an open secret that there is no room for more subsidies, but that has been the case for long and government has had subsidy overruns in the past budgets too - so this year may not be any different. The government can no longer use the 2007-08 situation as an excuse for the continued inter-disco cost differential since it has had the matters in its own hand - yet the issue remains there with all its vigour.
Realising the gravity of the issue alone won serve the cause unless the political will to stand up and deal with the root cause is shown. Besides rationalising tariffs, the time to rationalise the sectors infrastructure to curtail the transmission and distribution losses is upon the government.
The oil prices are on a rise, and they may well mount the circular debt to unimaginable levels come summer time. Magical wand or not, the time to act and act soon is here - mere cosmetic measures of restructuring the boards of the power companies and hoping that it would resolve matters on its own will be equal to fooling oneself.