Pakistan Energy 2035-FINAL 20th October 2014

Pakistan Energy Vision - 2035The escalating problem of circular debt is principally due to following reasons:‣ A fuel price methodology delaying the infusion of cash in to the power sector.‣ Poor governance‣ Poor revenue collection by DISCOs‣ Transmission and Distribution losses and Theft‣ Delays in tariff determination by an inadequately empowered regulator coupled withinterference and delay in notification by GOP.‣ Prolonged stays on Fuel Price Adjustments(FPAs) granted by courts‣ Delayed and incomplete payment by Ministry of Finance (MOF) on Tariff DifferentialSubsidy (TDS) and KESC contracts payments.The role of federal government is also insignificant in passing appropriate legislation to controlelectricity theft, strengthen regulatory process, promote energy conservation, transparency andencourage an open and competitive market.There are also some secondary issues exacerbating the problem of circular debt in Pakistanwhich includes: inadequate budgeting of TDS, non-improvement in tariff terms and conditions,poor thermal power plant efficiency, non-commercial/nonprofessional approach towards loadshedding, unfavorable generation mix, GOP neglect in promoting demand side managementand late payment surcharges (LPS) paid by CPPA to IPPs 44 .44 The Causes and Impacts of Power Sector Circular Debt in Pakistan. (2013). Commissioned by PlanningCommission of Pakistan and funded by United States Agency for International Development (USAID).45 | P a g e