The unending circular debt saga

The power sector has continued to bleed as the circular debt pile swells without any check. Though successive governments have attempted to find workable solutions, yet success has eluded them for years. The Pakistan Tehreek-e-Insaf (PTI) government, which remained in power from August 2018 to April 2022, left unsettled Rs1.6 trillion in circular debt. The debt accumulated to Rs3.3 trillion during the government of Pakistan Democratic Movement (PDM) – a coalition of big and small political parties – which came to power after the PTI administration stepped down. Subsequently, the caretaker setup encountered a circular debt of Rs3.5 trillion during its short tenure ahead of general elections. Now, Prime Minister Shehbaz Sharif-led government is projecting that power distribution companies (DISCOs) may incur a further loss of Rs589 billion in the current fiscal year ending June 2024.