Energy sector: PIAF for slashing PSDP to overcome circular debt

26 Apr, 2013

Pakistan Industrial and Traders Associations Front (PIAF) has called for a drastic cut in Public Sector Development Programme (PSDP) to overcome energy sector circular debt that has crossed the staggering figure of Rs 870 billion.
The PIAF Chairman Malik Tahir Javaid in a statement on Thursday said that the amount represents about four percent of GDP, and if circular debt continued unabated, will increasingly constrain the availability of electricity and further slow down economic activity.
"We consider that some expenditure including defence budget are absolutely necessary but all unnecessary funds should be diverted to eliminate circular debt once for all. Only a consolidated energy strategy would work." He said that the private sector understands that poor governance, delayed recoveries and pilferage are the reasons for fast increase in the circular debt therefore the government should use iron hand to control the factor and if it needs some assistance from the private sector it would readily extend maximum co-operation.
He suggested that the government should undertake specific policies and programmes to improve the governance and performance of energy sector entities to decrease costs, increase cash flow, and ensure operational and financial integrity of the sector.
Malik Tahir Javaid said that it is very unfortunate that the government had failed to initiate improvements in the legal framework to curb theft of electricity had a strict action been taken in the past the trade and industry would have been in a bit better position to contribute to economic recovery.
"The federal government also has been lax in passing appropriate legislation to curb electricity thefts, promote energy conservation, increase commercial transparency, strengthen regulatory entities, and promote an open and competitive energy market."
He said at present thermal power plants are operating 40 to 50 percent power generation capacity, which would further drop due to non-payment of dues. He said that Pakistan was going against international practices with respect to energy mix as no mega hydel project had been started after Ghazi Brotha Hydropwer Project.

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