Circular debt will level off this year

[Tom M]

if A == B == C there is no problem
i take it they are not equal

You are right, they won't be equal in almost all cases. Moreover there will be additional associated costs like interest and debt servicing charges etc. It is a cycle and keep on growing unless all or any of the party involved don't take serious steps to generate enough money to pay off debts or give a concession to his fellow creditor and incure some losses.

 

[jupiter2007]

What needs to be done?
Power generation (Nuclear plants, Hydro power, Coal, Wind, Solar, wave, solar steam power generator)
Power transportation
Better management
prevent power theft
new advance electric meter with remote monitor.

why should we pay for theft and line losses..

go and fck those WAPDA, PEPCO,LESCO, SESCO, HESCO, KE's line men and SDO's who allow these theft to fill their fat belly.

We need to do like Singapore. Public lashing for anyone stealing power.

 

[ziaulislam]

Sounds good. But practically someone will have to take some loss for circular debts to end. I guess here the government (especially the power ministry if any) will absorbe some losses to end this bad cycle.



To put it simple A owe money to B and B owe money to C and C in turn owe money to A. Hope you understood.

circular debt is combination of IPPs, GENCOs and WAPDA..IPPs debt is about 35-40% of debt..this is the non govt part..in turn IPP owes almost half of that amount to PSO..

so in reality the books to be adjusted govt needs only 400-500 billion rupees..

the reason why govt aims to collect 400 billion via bonds...

some money is going to come up once govt privatize GENCOs and LNG plants..there worth is 8-10 billion dollars

 

[ziaulislam]

What needs to be done?
Power generation (Nuclear plants, Hydro power, Coal, Wind, Solar, wave, solar steam power generator)
Power transportation
Better management
prevent power theft
new advance electric meter with remote monitor.



We need to do like Singapore. Public lashing for anyone stealing power.

what happened..

Power generation (Nuclear plants, Hydro power, Coal, Wind, Solar, wave, solar steam power generator), it did happened but without bidding creating 20% expensive power than what it would have been especially the coal plants and hydro plants..it blocked KPK plants by two means, first refusal of soverign grantee second holidng 180 billion in hydro profits
Power transportation..nothing..
Better management..nothing
prevent power theft..nothing..
new advance electric meter with remote monitor...funding was provided by Asian bank for 800 million dollars but was blocked by PML N govt claiming it was expenisve project

 

[VCheng]

Power transportation..nothing..
Better management..nothing
prevent power theft..nothing..

And yet the decision was made to tack on these costs for those who do pay their bills.

 

[Tom M]

circular debt is combination of IPPs, GENCOs and WAPDA..IPPs debt is about 35-40% of debt..this is the non govt part..in turn IPP owes almost half of that amount to PSO..

so in reality the books to be adjusted govt needs only 400-500 billion rupees..

the reason why govt aims to collect 400 billion via bonds...

some money is going to come up once govt privatize GENCOs and LNG plants..there worth is 8-10 billion dollars

I guess the bond route will be a temporary relief, not a fix. But the last part the privatization route sounds sensible. But the question is how much the investors are ready to pay for distressed entities, not it's real worth for sure. For example, In India we have seen the exercise to privatize the debt ridden Air India fail gloriously with no takers at a reasonable price. And I guess the investors are correct from their POV.

So the real challenge in front of IK government will be to fetch maximum money possible via privatization. And it's easier said than.

 

[maithil]

One would hope so. Especially after Asad Umer had this bright original idea of borrowing 200 billion PKR to injuct in this circular debt crisis.

 

[ziaulislam]

I guess the bond route will be a temporary relief, not a fix. But the last part the privatization route sounds sensible. But the question is how much the investors are ready to pay for distressed entities, not it's real worth for sure. For example, In India we have seen the exercise to privatize the debt ridden Air India fail gloriously with no takers at a reasonable price. And I guess the investors are correct from their POV.

So the real challenge in front of IK government will be to fetch maximum money possible via privatization. And it's easier said that.

if it levels off the whole problem will be the fix..the problem was that in an era where countries were using coal we were environmental friendly and were using furnace oil which was 3x more expensive. now we have added coal(albeit more expensive than usual coal) and highest eff LNG plants, the problem is the debt of 1400 billion, its the fact that we use to incur 1 billion rupees/day

1400 billion can easily be paid off, its just 3% of GDP, can be easily paid off in 3-5 years, especially since its "circular debt" the real debt is probably not more than 400-500 billion rupees, also another 600 billion is parked in shell company and can be paid slowly over decades..

PSO will get 300+ billion rupees for IPPs and KESC has over 90 billion to WAPDA..govt owes 250 to WAPDA

 

[VCheng]

if it levels off the whole problem will be the fix..the problem was that in an era where countries were using coal we were environmental friendly and were using furnace oil which was 3x more expensive. now we have added coal(albeit more expensive than usual coal) and highest eff LNG plants, the problem is the debt of 1400 billion, its the fact that we use to incur 1 billion rupees/day

1400 billion can easily be paid off, its just 3% of GDP, can be easily paid off in 3-5 years, especially since its "circular debt" the real debt is probably not more than 400-500 billion rupees, also another 600 billion is parked in shell company and can be paid slowly over decades..

PSO will get 300+ billion rupees for IPPs and KESC has over 90 billion to WAPDA..govt owes 250 to WAPDA

The real fix is not in statistical jugglery and false hopes (and doctored title threads), but in making sure that the consumers of power pay their bills on time to the suppliers and producers. Until that is achieved, the basic problem remains.

 

[ziaulislam]

The real fix is not in statistical jugglery and false hopes (and doctored title threads), but in making sure that the consumers of power pay their bills on time to the suppliers and producers. Until that is achieved, the basic problem remains.

someone got offended..
being a student of statistics, i personally know that the world runs of statistic and projections..

 

[VCheng]

someone got offended..
being a student of statistics, i personally know that the world runs of statistic and projections..

LOL. Doctoring titles is merely childish, a violation of PDF rules and exposes your own bias. What I highlighted is important: Consumers of power must pay their bills on time to the suppliers and producers. Until that is achieved, the basic problem remains.