current affairs MCQ #6799

The Circular Debt problem that emerged from CPEC Phase I power projects primarily relates to which structural issue in Pakistan's energy sector?

current affairs MCQ #6799

  1. Question 1

    Q1. The Circular Debt problem that emerged from CPEC Phase I power projects primarily relates to which structural issue in Pakistan's energy sector?

    • A) Overbuilding of renewable capacity without grid integration
    • B) Capacity payment obligations exceeding distribution company revenue collection
    • C) Fuel import costs denominated in Chinese Yuan causing forex losses
    • D) Chinese engineers demanding higher salaries than budgeted

    Answer: Capacity payment obligations exceeding distribution company revenue collection

    Explanation: Pakistan committed to paying IPP capacity charges (guaranteed payments for installed capacity regardless of electricity actually used) that grew to exceed what distribution companies collected from consumers, creating an expanding circular debt that reached over Rs. 2.5 trillion by 2023.