The single most crucial matter dragging the economic development and budget allocations is the massive energy sector circular debt. The base amount in the power sector (DISCO's, NTDC, WAPDA) of Rs 301 billion has been or is being transferred to the debt holding company PHCL under MOW&P. While this will clear the balance sheets of the sector companies, the repayment under a 15-year plan will require annual payments of Rs 50 billion from the budget. What is even of more concern is that an additional debt of about Rs 200 billion has accrued which is currently parked in the oil and gas sector entities, namely PSO, OGDC, SSGC, SNGPL, PP etc. The Prime Minister's energy conference in May had reviewed the matter and it was decided that Rs 116 billion would be raised through new TFC's to pay off PSO, gas utilities, etc. Unfortunately, this has not been done to-date and only partial amount has been allocated. Meanwhile, the cumulative circular debt of nearly $6 billion continues to escalate. The real issue of the continuous accumulation of the energy sector debt has not been addressed or resolved. The outcome is very clear, as the circular debt continues to escalate, and even the repeated increases in power tariff, have not been sufficient to cover the fiscal gap in the power sector. A multi-prong strategy is required to address and resolve the financial gap, rather than repeated power tariff increases as per IMF dictates. The recent power tariff hike of 7.6 percent is counterproductive and will further increase the burden on industry, business and the common citizens. Some proposed actions that can resolve the financial gap under an intelligent policy and well formulated strategy are: Even with a 50 percent achievement, the above and other supportive actions would provide for a much more and significant fiscal improvement than the proposed tariff increases, which incidentally are counterproductive, adversely affect the cost of manufacturing and exports, and provide further incentives for additional theft in all sectors. To achieve the above fiscal gains, it is required that the energy sector entities be placed under professional and competent management, and the board of directors be restructured on a non-political basis, to allow for good corporate governance and fiduciary responsibility. Further, the energy sector companies must be provided autonomy and full government support to enable them to move to economic and commercially viable operations without political interference. This is the only way to get out of the ever-escalating circular debt. The government will be well advised to act now, before the nation drowns in debt. The writer is former CEO, EMR-Consult, and former MD PEPCO and MD SSGC.