KARACHI: Chairman of National Business Group Pakistan, President Pakistan Businessmen and Intellectuals Forum and All Karachi Industrial Alliance, Mian Zahid Hussain said that it is astounding that the circular debt of the power and gas sectors has reached almost Rs6 trillion.
It also indicates that the strategy of reducing the amount of circular debt by increasing tariffs has yet to be successful, and the IMF may seek clarification about it as the figures differs from what the lender was told. He said that even though electricity and gas prices keep increasing, the debt is getting bigger and hurting the masses and the economy.
The veteran business leader said that the public was told the continuous increase in energy prices would help eliminate the circular debt, but this policy has backfired. Now, the circular debt equals 5.4% of the country’s economy, which, if not controlled, will lead to an economic meltdown, he said. He said that according to the official data, the circular debt reached 5.725 trillion rupees by November 2023, in which the power sector debt was 2.703 trillion rupees, while the debt of the gas sector reached 3.022 trillion.
The revelation of a rampant increase in debt could strain relations with the IMF, as they were told otherwise during meetings held two months ago.
Mian Zahid Hussain said that the IMF may seek an explanation from Pakistan as to how there was a sudden difference of Rs1.5 billion in the figures.
He said that 29 million household consumers currently receive a subsidy of 631 billion rupees on natural gas, of which the government pays 168 billion rupees, and the remaining amount comes from industrial and commercial consumers. If this subsidy is removed, gas will become more expensive for domestic consumers, but many products will become cheaper, which will relieve them while boosting industrialization and exports.
He said that the industrial sector is currently in a terrible condition as it is being supplied with the most expensive electricity in the region, affecting production and exports. He said that payments to many foreign power companies have been stopped due to the circular debt. The friendly countries are putting pressure on Pakistan for payments and making future loans conditional on these payments, which has become a severe issue.
He said that almost one hundred and fifty thousand people employed in the power sector are ruining the economy, and if they are not controlled, the economy will sink rapidly.
Copyright Business Recorder, 2024
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