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Circular Debt—an Unfortunate Misnomer

Author

Listed:
  • Afia Malik

    (Pakistan Institute of Development Economics, Islamabad)

Abstract
The electricity sector in Pakistan has suffered huge losses (cumulated loss of Rs 5 trillion about 12 percent of current GDP). The nomenclature of “circular debt” has confused policy-makers to think that it is a mere accounting problem and not a result of deep structural issues that need to be carefully unravelled. Besides creating budgetary issues it has badly affected the overall sustainability of the electricity supply chain for many years. The study finds that not only governance issues, operational and commercial inefficiencies in the system; it is the lack of effective planning and flawed policies on the generation side, and distortions in our pricing strategy accompanied with irrational subsidies on the demand side, that are contributing to this financial liability.

Suggested Citation

  • Afia Malik, 2020. "Circular Debt—an Unfortunate Misnomer," PIDE-Working Papers 2020:20, Pakistan Institute of Development Economics.
    • Handle: RePEc:pid:wpaper:2020:20
    as

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    File URL: https://www.pide.org.pk/pdf/Working%20Paper/WorkingPaper-2020-20.pdf
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    References listed on IDEAS

    as
    1. Haroon S. Awan & Ghulam Samad & Naseem Faraz, 2019. "Electricity Subsidies and Welfare Analysis: The Perspective of Pakistan," PIDE-Working Papers 2019:164, Pakistan Institute of Development Economics.
    2. Bacon,Robert W., 2019. "Learning from Power Sector Reform : The Case of Pakistan," Policy Research Working Paper Series 8842, The World Bank.
    3. Afia Malik, 2007. "Effectiveness of Regulatory Structure in the Power Sector of Pakistan," PIDE-Working Papers 2007:25, Pakistan Institute of Development Economics.
    4. Rashid Amjad & Musleh Ud Din & Idrees Khawaja & Nasir Iqbal & Ahmad Waqar Qasim, 2012. "Fiscal Federalism In Pakistan," PIDE Monograph Series 2012:4, Pakistan Institute of Development Economics.
    5. Khalid, Syed Adnan & Salman, Verda, 2020. "“Welfare impact of electricity subsidy reforms in Pakistan: A micro model study”," Energy Policy, Elsevier, vol. 137(C).
    6. Walker,Thomas & Canpolat,Ezgi & Khan,Farah Khalid & Kryeziu,Adea, 2016. "Residential electricity subsidies in Pakistan : targeting, welfare impacts, and options for reform," Policy Research Working Paper Series 7912, The World Bank.
    7. Robin Burgess & Michael Greenstone & Nicholas Ryan & Anant Sudarshan, 2020. "The Consequences of Treating Electricity as a Right," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 145-169, Winter.
    8. repec:pid:wpaper:2012:4 is not listed on IDEAS
    9. Afia Malik, 2012. "Power Crisis in Pakistan: A Crisis in Governance?," PIDE Monograph Series 2012:1, Pakistan Institute of Development Economics.
    10. Smith, Thomas B., 2004. "Electricity theft: a comparative analysis," Energy Policy, Elsevier, vol. 32(18), pages 2067-2076, December.
    11. Ziad Alahdad, 2012. "Pakistan’s Energy Sector: From Crisis to Crisis-Breaking the Chain," PIDE Monograph Series 2012:6, Pakistan Institute of Development Economics.
    12. Robin Burgess & Michael Greenstone & Nicholas Ryan & Anant Sudarshan, 2020. "The Consequences of Treating Electricity as a Right," Journal of Economic Perspectives, American Economic Association, vol. 34(1), pages 145-169, Winter.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Afia Malik & Amena Urooj, 2022. "Electricity Tariff Design: A Survey," PIDE Knowledge Brief 2022:81, Pakistan Institute of Development Economics.

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    More about this item

    Keywords

    Circular Debt; Power Sector; Governance; Weak Policies;
    All these keywords.

    JEL classification:

    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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