Power sector circular debt shrinks to near Rs1.6tr

August 15, 2025 (MLN): Pakistan’s circular debt in the power sector dropped to Rs1.6tr by the end of June 2025, which showed a notable reduction of 33% from last year’s level of Rs2.4tr.

This improvement was largely attributed to the disbursement of Rs801bn to power producers under the government’s stock clearance drive.

The Ministry of Power reported that liabilities to power producers fell substantially to Rs861bn in June 2025 from Rs1.6tr a year earlier.

Generation companies’ (GENCOs) outstanding dues to fuel suppliers declined by 16%, reaching Rs93bn, while the amount held in Power Holding Limited (PHL) slipped by 3% to Rs660bn.

Other adjustments, such as previous year settlements, reduced the debt by Rs358bn compared to Rs198bn last year.

However, persistent inefficiencies remain a drag on the sector.

Distribution companies’ (DISCOs) losses and operational shortcomings added Rs265bn to the debt pile, and under-recoveries contributed another Rs132bn, down sharply from Rs315bn in the same period last year.

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