||**2006**|**2007**|**2008**|**2009**|**2010**|**2011**|**2012**|
|---|---|---|---|---|---|---|---|
|**_Stock of debt at start of year_**|**_84.1_**|**_111.3_**|**_145.0_**|**_161.2_**|**_235.7_**|**_356.7_**|**_537.3_**|
||||_No_|_n-Collect_|_ion_|||
|Federal Government|0.2|0.4|0.1|0.2|1.8|1.6|0.4|
|FATA|10.9|6.4|9.4|10.2|(78.3)|4.3|13.2|
|Provincial Governments|2.3|0.8|5.1|7.2|16.7|36.1|15.8|
|Private consumers|9.1|8.0|9.6|19.9|25.6|39.3|54.6|
|Others|1.0|1.6|1.5|4.2|5.5|1.8|2.9|
|CPAA receivables from KE|3.8|16.8|26.7|(11.9)|44.0|(1.8)|13.8|
|**_Total non-collection_**|27.2|33.7|52.5|29.8|(24.7)|81.3|100.7|
||||_Tari_|_ff and su_|_bsidy issu_|_es_||
|Tariff notification delay|NA|NA|NA|NA|NA|NA|72.2|
|Fuelprice adjustments|NA|NA|NA|NA|NA|20.1|33.3|
|DISCOs TDS claims less actual dispersed|<br>NA|NA|(36.3)|39.7|134.8|48.7|106.0|
|Allowed T&D losses less actual|NA|NA|NA|5.0|19.9|21.8|22.8|
|**_Total tariff and subsidy issues_**|NA|NA|(36.3)|44.7|154.8|90.6|234.2|
|**_Total circular debt atyear end Billion Rupees_**|**_111.3_**|**_145.0_**|**_161.2_**|**_235.7_**|**_365.7_**|**_537.5_**|**_872.4_**|
|**_Total circular debt atyear end Billion US$_**|**_1.85_**|**_2.39_**|**_2.29_**|**_2.88_**|**_4.24_**|**_6.23_**|**_6.52_**|

_Source_ : Causes and Impacts of Power Sector Circular Debt in Pakistan. March 2013. USAID and Planning Commission of Pakistan.

The magnitude of the stock of circular debt by the end of 2012 (US$ 6.52 billion) was such that action was desperately needed to avoid the consequences of so much underpayment to the various companies in the supply chain.

The elections in 2013 marked the first time that a party (PPP) had run its full term, and when PML(N) won the election this was the first transfer of power between parties on a regular basis. The power crisis was one of the primary election discussion points among the contestants— violent protests had broken out in various parts of the country due to power outages in 2011, 2012 and 2013.

The incoming government was ideologically opposed to international assistance and the party had campaigned on a platform of economic autonomy but had little choice except to negotiate a loan with the IMF.<sup>15</sup> The previous PPP government had failed to meet the terms of the previous IMF loan and the country was still struggling to repay billions of dollars of that loan. As a condition of the new $5.3 billion loan, the IMF insisted on a complete overhaul of the energy sector with a focus on privatization and power tariffs. Because of the loan, the government cleared $4.8 billion of the stock of circular debt in 2013.<sup>16</sup> Although the government was unable to ensure that no further increases in power sector arrears were incurred, by 2015/2016 the incremental arrears

> 15 _IMF and Pakistan agree to a $5.3 Billion Bailout._ Declan Walsh and Salman Masood. New York Times, July 4, 2013.

> 16 Although government statistical sources mention circular debt, there does not appear to be a continuous series of data that would permit a simple extension of Table 1 to earlier and to more recent years. “Dynamics of Circular Debt in Pakistan and its Resolution”. S. Ali and S. Babar. 2010, _The Lahore Journal of Economics_ (15) pp.61-74.

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