The much-hyped plan to reduce Pakistan’s power sector circular debt by a staggering Rs1.3 trillion has hit an all-too-predictable obstacle: Chinese independent power producers (IPPs) are balking at waiving late payment surcharges (LPS), a linchpin of the scheme. This setback — far from surprising — exposes the fragility of a strategy that mistook financial reshuffling for structural reform.

Despite the optimism of stock market speculators and government cheerleaders, the plan’s collapse was foreseeable. It is now back to square one, leaving Pakistan’s energy sector mired in its perennial quagmire.

The circular debt — a complex web of unpaid obligations across the energy supply chain — cannot be tamed by merely shifting liabilities from one balance sheet to another. Such manoeuvres amount to little more than Excel-sheet sleight of hand, side-stepping the root causes: one-sided contracts, inefficiencies in distribution companies, and persistent grid anomalies. These are not financial puzzles to be solved with clever accounting or price adjustments; they are technical and engineering challenges demanding rigorous, ground-level solutions. Imagine trying to fix a crumbling building by tweaking its blueprint on a spreadsheet — absurd, yet........

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