Chairman of the Pakistan Atomic Energy Commission Dr Ansar Parvez while addressing the 2009 convocation of the KANUPP Institute of Nuclear Power Engineering stated that Pakistan plans to build more nuclear plants in an effort to increase supply by a total of 8,800 MW. It was also revealed in a Business Recorder exclusive that private sector importers have spent over 1.2 billion dollars to purchase power generating machinery reflecting a surge of about 63 percent from the corresponding period of a year before. Establishing captive power plants is unlikely to deal with the severe energy shortage that the country is grappling with and it is hoped that the government will focus its attention on mega projects with the capacity to generate from between 1000 to 2000 MW. There is little doubt that the country is facing a severe energy crunch which is impacting on not only our capacity to increase productivity, as energy remains a major input of most industrial production as well as services sector output, but is also creating much hardship within the citizenry that has led to violent street protests in many a locality and city in months past, especially during the summer. Thus the emergent need to increase supply was acknowledged by the present government soon after it took over power. The strategy released by relevant members of the government and endorsed by President Zardari in numerous statements is to encourage a public-private partnership as a means to meet the energy crisis in the short, medium and long term. The short term envisages reliance mainly on renting plants from the foreign private sector, the medium term on allowing local private sector importers, with or without foreign collaboration, to purchase plants from abroad that can begin generating electricity soon after their establishment and the long term envisages mega dam projects, Thar Coal, as well as setting up nuclear power plants. Purchasing energy from Iran or Central Asian Republics is also a long term project given that after an agreement is inked four to five years at least would be required to lay the transmission lines. Plans for looking at alternate energy sources including wind and solar are also in the works but these are conceived of relatively small capacity. Few would challenge that this strategy would pay dividends. Generation capacity needs to be strengthened if Pakistan is to achieve economic development; however the government must be aware of a major issue that has plagued this country's power supply: that of circular debt which is rooted in the failure of many government institutions, heavy users of energy in the private sector and regions like Federally Administered Tribal Areas to pay their electricity bills. This has severely compromised the capacity of the distribution companies to pay to the generating companies, which, in turn have been unable to pay the Oil Marketing Companies (OMCs). As the public witnessed late last year the OMCs were then unable to purchase oil from abroad resulting in unprecedented rise in load shedding. This circular debt was such a major issue that the Letter of Intent (LoI) submitted by the government to the International Monetary Fund board, reflective of a verbal agreement between the two sides, specifically agreed to formulate a plan to eliminate circular debt by end-March 2009. In the second LoI dated 16 March this year the plan was revealed: issuance of government guaranteed Term Financing Certificates by Pakistan Electric Power Company (Pepco). Be that as it may the danger of the circular debt re-emerging at some point in the future remains unless electricity supplied is duly paid for by all consumers and energy theft reduced with a view to eliminating it. Non-payment by government institutions and regions may be dealt with by privatising the distribution companies. And as technology to identify the actual amount of electricity used by each client is available on the market, inclusive of metering of sub-stations, pole mounted transformers, etc, to check and counter-check a cluster of users. Furnaces, ice factories, deep-freezing factories and other bulk users are known for stealing power by tampering with their meters in connivance with the line-staff, although technology to check such theft is already there. Introduction of this technology however, requires investment, which has not been made available. The amount required is miniscule compared to the losses borne by the tax-payer - when the Federal Government is forced to foot the arrears. Second, the present tariff structure needs a major change. At present, lifeline consumers and fixed tariff users for tubewells and those living in Fata are being subsidised by the industrial and commercial consumers. This is making businesses in Pakistan uncompetitive. Subsidy of any kind must come from the Federal Budget. Industrial sector needs a break. Their dependence on thermal captive power (self generated) is out of sheer desperation and not by choice.