Professional Documents
Culture Documents
Circular Debt in Pakistan
Circular Debt in Pakistan
suppliers and creditors. EXAMPLE: circular debt could also explain by the example, three persons are indebted, Mr. A owes Rs 100 to Mr. B and Mr. B owes same amount to Mr. C and Mr. C owes Rs 100 to Mr. A. according to the current situation the net balance of all debts in between the three persons is zero.
KESE (DISTRIBUTER) PEPCO AND HUBCO ( POWER PRODUCER) PSO (FUEL SUPPLIER TO PEPCO AND
HUBCO) Pak-Arab Refinery Ltd (PARCO) This debt circle begins with the government as the biggest debtor and ends with a government-owned entity as the biggest creditor.
tariffs.
3) LIQUIDITY TRAP
When people expected rate of return from investments in securities and other assets become low, investments go down. Circular debt increases due to lack of supply of money in the market.
5) GOVERNMENT POLICY
The exporters are also not facilitating properly. There is no sustainable job to produce more electricity. Self consideration or Party consideration of the government.
Cont..
Shortage in Oil and gas units cannot generate electric power according to their capability. The circular debt in power sector is reached Rs.664.52 billion.
RECEIVABLES Rs.299 billion 14.3 billion Rs.133.541 billion Rs. 775.2 billion
SOCIAL EFFECTS
INCREASED PRICES
The most effected industry by circular debt is oil, petroleum, power and electricity generating companies.
OGDCL Attock Refinery Limited (ARL) PAK Arab Refinery Limited (Parco) Pakistan State Oil (PSO) Shell Sui Northern Gas Pipelines (SNGPL) Karachi Electric Supply Company (KESC) Hub Power Company Kot Addu Power Company Water and Power Development Authority (WAPDA Hydel) Pakistan Electric Power Company (PEPCO)
The total receivables of these companies are Rs775.2 billion and payables are Rs516.7 billion. Oil and Gas Development Limited (OGDCL) has the greatest share of 115.5 billion out of 258.5 billion.
Parco PPL GHPL SSGCL Rs 37.5 billion receivables Rs 22.2 billion receivables Rs 9.6 billion receivables Rs 7.1 billion receivables
SNGPL and Karachi Water Board have 13.4 and 1.2 billion net payables respectively.
Raising the Tax to GDP ratio is a key pillar of the governments economic strategy. In addition, other measures such as improving tax administration and reinstating tax audits have been taken. Restructure key Public Sector Enterprises (PIA, PEPCO, Railways, TCP, USC, Pakistan Steel Mills, and NHA) to stop leakages caused by annual losses amounting to approximately 1.5% of GDP. The eventual aim is to turnaround these PSEs into profitable, self sustaining ventures under Public Private Partnership mode. Under reform of the power sector, electricity tariffs a full cost recovery tariff for the power utilities. Under a new Act of parliament, adjustment in tariff for changes in fuel prices for power generation has been made automatic. Checking inflation. Bringing people to the centre stage, by appropriately designed employment and training programs.