Circular debt is the money which various government departments owe to PEPCO as electricity charges. When the government departments do not pay for the power they use, PEPCO fails to pay to various power producing units from where it purchases electricityand the power producing units cannot pay to oil companies to purchase fuel. This creates a circle of debt which curtails capacity of the power producing units to produce electricity which then causes load shedding.Currently, the government owes over Rs 287 billion to the private power producers and the debt is increasing by leaps and bounds. The authorities create such a jumble of figures that one should strike one’s head against a wall.
Again the government purchases power at high rates, but claims that it is selling it to the consumers at lower rates and has to pay the difference of amount to the power producing units from the national kitty. For arguments sake, why the government does not allow the power producers to import oil themselves duty-free. In this case, the power producers will be able to produce much cheaper electricity than they are producing right now and that also in bulk. Low the cost of production, low the rate of electricity –simple is that. But in the present scenario, the oil companies provide oil to the power producers after paying all taxes and duties to the government, raising the oil prices to multiplication levels. Again a vicious circle starts. The consumers are made to pay electricity bills with all taxes, and that the electricity is made of oil on which various duties and taxes are already paid. However, the consumers are told day and night that they are being provided electricity at subsidised rates and the financial wizard keeping fleecing the people on one pretext or the other. Reportedly substandard electricity meters are provided to the consumers with 35 percent fast speed than the normal. As a result, a consumer having an electricity bill of Rs 1000 will have to pay Rs 1350 and may have to pay more if sales tax is added to it.
There are several other options to produce electricity such as solar energy, hydropower, and wind energy. Instead of importing solar panels from China, the government should allow setting up industries to manufacture solar cells in the country. If solar cells are produced in Pakistan, we will be able to produce electricity more than our requirement.
Regarding circular debt, it is haunting the nation like a monster and the government should find a permanent solution to the problem if it wants to keep the wheel of industry in motion.