Energy sector’s circular debt touches record Rs5,206 billion: IMF report

Circular debt of Pakistan's energy sector has touched record Rs 5,206 billion, reported 24NewsHD TV Channel.

According to IMF report on Pakistan's energy sector circular debt, gas sector's circular debt reaches Rs 3,442 billion and electricity sector's circular debt touched Rs 1,764 billion.

IMF report said that Pakistan's energy sector is facing financial pressure. The government was implementing measures to rationalize tariff reforms, subsidy system. The report said the government has assured regular tariff adjustments under IMF program.

The government has assured IMF that it will phase out untargeted subsidies. The accumulated debt in the power sector will be converted into CPPA liabilities. The government will take others measures such as imposing additional surcharge on electricity consumers to repay the original debt. The reforms are aimed at restoring financial stability, IMF report added.

However, this could also create short-term affordability issues for the public, the report said. Annual rebasing of electricity rates, semi-annual changes in gas tariffs will help in real cost, the report said. These measures could lead to increased private investment. The financial space for climate change-related spending could be created. The IMF report demanded that effective measures to protect vulnerable consumers will have to be further improved.

Reporter Waqas Azeem