Resolution of the energy sector circular debt

It is a matter of extreme concern for the people of Pakistan that energy sector circular debt continues to jeopardise the operations of the entire energy sector supply chain. Further, it is evident that the massive escalation of the circular debt in the past 2 years, and non-resolution of the payment issue to the OMC's, gas, utilities, IPPs and E&P companies threatens the economic backbone of the country.
It is in the knowledge of the MOF/MW&P that the full transfer of the Rs 301 billion power sector circular debt, identified and acknowledged, to Power Holding Ltd (PHL) has not been finalised with the debtor banks. On top of this a new tranche of about Rs 145 billion debt has accumulated, which is mostly parked in PSO, OGDC, SSGC, and SNGPL.
Again the roots of this debt originate from the grossly mismanaged power sector. There have been continuing reports in the press over the past few weeks of impending POL shortages, as well as severe constraints in FO supply to the IPPs and Gencos. This situation seems to worsen day by day.
Whereas the PM has given the go-ahead of injections of Rs 45 billion in the energy sector (mostly PSO and onward to the refineries) thru a new TFC, it must be considered as to how, and when and at what cost this massive debt will be paid. (Rs 301 billion + Rs 45 billion + Rs 100 billion). Clearly the GOP/MOF needs to recognise and resolve the root problem. The primary reasons for the continued escalation and non-settlement of the energy sector circular debt are; (estimated figures)
i) Non-payment of Rs 49 billion by KESC to Pepco/NTDC
ii) Non-payment of Rs 20 billion by KESC to SSGC
iii) Non-payment of Rs 80 billion by Fata to Pepco/NTDC
iv) Non-payment of Rs 20 billion by FBR to SSGC/SNGPL
v) Non-payment by GOS of Rs 22 billion to Pepco/Hesco
vi) Non-payment by GOP/prov. departments of Rs 20 billion to Pepco/Discos
Total (estimated) payables of to the energy sector Rs 211 billion. Total (estimated) payables by KESC alone are Rs 69 billion. There can be no plausible excuse for withholding of such a massive payment by KESC, which has already been provided a Rs 32 billion "adjustment" by the GOP to facilitate the transfer of ownership/operations from Al-Jomaih to Abraaj Holdings.
On top of this precarious payments position, the Pepco companies are operating with losses/theft of about 12% (in addition to technical losses of say 10%) wherein 1% loss trannslates to Rs 5 billion, (Rs 60 billion annually). The question clearly is how can the economy and the people of Pakistan bear this burden of Rs 446 billion which is escalating on a daily basis. The need of the hour is to resolve the underlying payment issues from KESC, Fata, FBR, AJK, GOS, GOB and GOP organisations to Pepco/NTDC, who in turn can pay the IPPs, OMCs, E&P Cos etc.
Further without a massive shake-up of the management of the Pepco companies, Wapda, oil and gas companies etc and placement of competent management and qualified board of directors, the sectoral governance and operations will not improve. Loud talk, baseless claims of resolution of the circular debt, or fiery speeches will not make the circular debt monster disappear. The MOF/GOP must take corrective action now, else the situation will lead to impending disaster in the energy sector and also trigger an economic meltdown. The choice is clear.