How to get out of Electricity Circular Debt?

[nahtanbob]

that is last resort.

make it first resort and move on with your lives

This is a perfect example why you 2 iq pajeets shouldn’t speak on matters way above your comprehension level. Stick to shitting on the streets.

try solving it Mr Cup Cake

 

[Baburfromsarmarkand]

Invade Iran and capture their oilfields like Saddam did to Kuwait, Iran has no allies and is under sancitons and the us will help out. We can stake a historic claim or something.

or just focus more on nuclear plant.

 

[epebble]

Focus on the economy, raising GDP per capita income............

This is the only solution.

When the GDP per capita is raised then the electricity bill can be raised as well. Increase the bill for the have and subsidize the have not is adopted by Indonesian gov for so long.

Only sensible answer. Pakistan's problems are not expensive electricity (or anything) but low incomes. If people's income increases by becoming productive, no one will complain about 'huge' electric bill. Pakistan should not go in search of cheap electricity. That does not exist.

 

[Olympus81]

If you look at the IPP projects you’d see Pakistani industrialists with politicians proxy being silent partners. Some of them were CPEC projects. Eg. Sahiwal project, a coal power project setup on prime agricultural land, that has to import coal, via Karachi port and transport via rail to Sahiwal. Who made this decision?

The state signed the agreement in US$ and made clauses of guaranteed payments akin to financial suicide. These are the issues in a nutshell on the supply side.

Secondly, you hope over the years these IPP projects expire and are replaced by renewals. Or energy based on local resources. Or you bring dams (hydropower) online as quickly as possible with focus on small and medium ones.

Thirdly, you privatize the electricity generating companies gradually.

Forthly, the distribution losses are a concern as well which you have to work on reducing.

Another point, if you generate additional electricity which you have to pay for, why not sell it to your neighbours.

 

[R2D2]

The electricity circular debt is a grindstone around the neck of Pakistani State and its poor population with each consumer being forced to pay as substantial percentage of his monthly bill to pay off the circular debt. The solution is to pass a Resolution or an Act in the Parliament for opening negotiations with the IPP’s towards ending the idle power purchase agreements with them by giving them one-time incentive to take their plants to other countries such as those in Africa, Asia or Latin America. Those that want to stay in Pakistan will not be paid while not running their plants.

Nationalization of the power plants should also be kept in mind as an option if the IPP's don't cooperate with the government to leave Pakistan.

 

[313ghazi]

privatize electricity companies. if you do not pay the bills your electricity connection is cut off

is that too hard ? i know it is not easy in Pakistan

The state has agreed to pay for all the electricity generated, regardless of whether it is used or not.

The state then also gives large subsidies to it's favourite children, who get free electricity or massively reduced cost electricity.

The employees of the state, then also happily take bribes to accept reduced payments for bills.

The non payment of bills is actually a small part of the problem. The biggest part is that we don't use all the electricity generated and a lot of it gets subsidies by the state for it's cronies.

 

[nahtanbob]

The state has agreed to pay for all the electricity generated, regardless of whether it is used or not.

The state then also gives large subsidies to it's favourite children, who get free electricity or massively reduced cost electricity.

The employees of the state, then also happily take bribes to accept reduced payments for bills.

The non payment of bills is actually a small part of the problem. The biggest part is that we don't use all the electricity generated and a lot of it gets subsidies by the state for it's cronies.

privately run entity will do a better job off purchasing power from the IPPs

 

[Communism]

The proper answer is population control a decade or more ago (on top of the following).


The IMF answer is to increase the tax to GDP ratio, which is the technically easiest, while being politically the hardest.


Pakistan has an absolutely absurdly low tax to GDP ratio compared to how it subsidizes just about all forms of consumption.

List of sovereign states by tax revenue to GDP ratio - Wikipedia

en.wikipedia.org

Privatization would do absolutely nothing in this scenario, as all of Pakistan's electricity infrastructure was built from foreign subsidies.


Privatization would simply make the current infrastructure more expensive, as it adds another layer of required profit on top of everything.


It would also result in a "Mark to Market" rebasing of the cost of electricity to the replacement cost, instead of the cost the massively foreign subsidized infrastructure was built at.


For Pakistan to afford the current level of subsidization of all forms of consumption, it needs a tax to GDP ratio of ~30-50%


Even a U.S. Chicago School designed hyper-capitalist economy like Chile has a tax to GDP ratio of ~20%.


Chile should probably count as more of a ~30% though, as the country gets a large portion of its budget from resource exports that are not included in tax revenue.

 

[Azadkashmir]

make it first resort and move on with your lives


try solving it Mr Cup Cake

russia will move after using nukes bye bye usa.

 

[mulj]

Easy, state owned production, free market distribution until market and energy system mature enough for private production energy plants

 

[Communism]

Easy, state owned production, free market distribution until market and energy system mature enough for private production energy plants

Capacity cost will always be higher than Variable cost in every single power production plant type.


Privatizing distribution will simply mean eating an even higher portion of the total as Capacity cost.


It would not solve anything.

Basic economics of power generation, transmission and distribution | EME 801: Energy Markets, Policy, and Regulation

 

[mulj]

Capacity cost will always be higher than Variable cost in every single power production plant type.


Privatizing distribution will simply mean eating an even higher portion of the total as Capacity cost.


It would not solve anything.

Basic economics of power generation, transmission and distribution | EME 801: Energy Markets, Policy, and Regulation

I am speaking from concrete examples in Europe as economically developed countries and they had exactly this path with slight variations.
If Pakistan wants to reinvent the wheel go for it, otherwise make sacrifices in political and social circles influenced by it.
So, states build and owns everything at first from plants, distributions lines, payment methods etc. then gradually introduce private capital to enhance profitability and sustainability of wholesome energy system, there is no other way if you are not USA.

 

[Communism]

I am speaking from concrete examples in Europe as economically developed countries and they had exactly this path with slight variations.
If Pakistan wants to reinvent the wheel go for it, otherwise make sacrifices in political and social circles influenced by it.
So, states build and owns everything at first from plants, distributions lines, payment methods etc. then gradually introduce private capital to enhance profitability and sustainability of wholesome energy system, there is no other way if you are not USA.

Pakistan is nowhere near the point to which that would be a good idea.


GDP per capita needs to increase massively before that is viable.

 

[R2D2]

Electricity should remain in public sector and it should be provided at cost to the public.

 

[mulj]

Pakistan is nowhere near the point to which that would be a good idea.


GDP per capita needs to increase massively before that is viable.

I am sad to hear that, as soon as that path is introduced and proposed by political subjects public should stand behind that concepts for the greater good for country and future generations.