Lenders, bureaucrats blamed for power crisis

The power sector default now stands at Rs2.5 trillion in addition to Rs2.6tr of circular debt despite over Rs3.4tr of subsidies paid since 2007 and total power sector losses of Rs5.7tr, a direct outcome of bad policies pursued by successive governments on the advice of the World Bank, Asian Development Bank and USAID. The poor governance structure controlled by the federal bureaucracy without taming the independent power producers (IPPs) —the elephant in the room — has equally responsible for aggravating the power sector crisis. Moreover, the sovereign guarantees provided by the government to borrow from commercial banks to finance the power sector deficit had crossed Rs2.055tr in September 2021 while crowding out the private sector borrowing. Pide study asks for a forensic audit of power firms, a complete halt on sovereign guarantees Power sector default (Rs2.5tr) refers to receivables of the electricity companies against various consumers including federal and provincial governments and private consumers. Concluding this based on a fresh study, the Pakistan Institute of Development Economics (Pide) — a state-run think tank — and the government differed publicly on the proposed induction of 10,000MW of renewable energy (RE) plants and proposed advanced metering infrastructure (AMIs) through the private sector.