Cross-indebtedness has been an energy sector issue since the 1980s. Although the ESRP provided the government the means to eliminate crossindebtedness by financing the arrears out of the budget, the respite provided by the ESRP was temporary, and cross-indebtedness became a major issue again shortly thereafter, reaching unprecedented levels of about PRs503 billion by mid-2013. The lesson is that paying down arrears of others creates a moral hazard and encourages some energy consumers to not pay their bills because of the knowledge that the government will eventually pay when the situation became untenable. The payment of arrears needs to be accompanied by a campaign of disconnecting delinquent customers and prosecuting those who steal electricity. The establishment of the AntiElectricity, Gas and Oil Theft Unit in July 2013 under the Federal Investigation Agency of the Ministry of Interior is a first step in addressing electricity theft and cross-indebtedness. The government, however, also needs to consider providing security to those enforcing the rules.
Energy Sector Restructuring Program