Growing circular debt.

KEEPING the lights on in Pakistan is proving much too expensive. Electricity has become unaffordable for a vast majority of households, with power producers and their fuel suppliers having their liquidity stuck somewhere in a deep hole, and the government accumulating a fiscally unsustainable mountain of debt that it doesn't know how to get rid of. The continued inability - or avoidance - of successive governments to effectively handle circular debt, or the cash shortfall across the power sector supply chain, means that the arrears it cannot pay to the power supply chain have now spiked to Rs2.44tr from Rs2.25tr at the end of September last year. At least a third of this amount is contributed by interest costs and late payment charges on the actual unpaid bills of the power producers and fuel suppliers. This is in spite of several plans and strategies that the authorities developed over the last few years to stop the increase in debt stock and liquidate existing arrears. Last year, for example, the PTI government had formulated a strategy to pay a part of this debt through payouts it expected to receive from state-owned, listed energy companies. The surge in the outstanding debt stock means that the government is again planning to charge an additional Rs43.34bn from power consumers at the rate of Rs2.18 per unit in the...