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Government Regulations in Pakistan Create Debt, Electricity Shortages

Created on June 30, 2015

Government Regulations in Pakistan Create Debt, Electricity Shortages

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Read the original report, "Pakistan’s Economic Disarray and How to Fix It," by James M. Roberts and Huma Sattar.

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One of the primary reasons for power-related debt (called “circular debt”) in Pakistan is a cycle that is caused by government overregulation and inefficient production and distribution structures. The government imposes the rates (tariffs) charged to consumers for the electricity and sometimes neglects to alter them in response to fluctuating world oil prices. This results in end users paying a lower rate for electricity than the actual cost of production.

FIGURE 1 • SR 172

Tags: Economics, Pakistan, Energy, Debt, Corruption