Pakistan’s Power Circular Debt Reaches Rs1.675 Trillion

Pakistan’s power sector circular debt stock stood at Rs1.675 trillion by June 2026, the National Assembly was informed, highlighting the continued financial pressures facing the country’s electricity sector.

 

Minister for Energy (Power Division) Sardar Awais Ahmad Khan Leghari said in a written response that the circular debt amounted to Rs1,675 billion as of June. He clarified that the figure represents a consolidated liability for the entire power sector, rather than separate debt figures for individual distribution companies (Discos).

 

Government Moves to Contain Circular Debt

 

The government is implementing the Circular Debt Management Plan (CDMP) to limit further accumulation of liabilities.

 

Under the plan, high-cost debt is being refinanced through a six-year financing arrangement aimed at lowering financing costs and reducing outstanding receivables from Discos.

 

Authorities are also strengthening oversight of distribution companies by setting targets for reducing transmission and distribution losses, improving bill recoveries and enhancing operational efficiency.

 

The government has also stressed timely payments of subsidies to Discos as part of efforts to prevent additional buildup of circular debt.

 

Petroleum Levy Raised to Rs80 per Litre

 

Separately, the Petroleum Division informed the National Assembly that the government has gradually restored the petroleum levy on petrol and diesel to Rs80 per litre.

 

The levy on petrol increased from Rs66.64 per litre on July 1 to Rs80 by August 20. The diesel levy stood at Rs79.54 per litre at the start of July, fell to Rs70.82 on July 11 and was subsequently raised to Rs80 per litre.

 

The government said the temporary reduction in the levy was intended to provide relief to consumers during a period of significant volatility in international oil prices. It was later increased in phases to bring collections in line with the target approved in the federal budget.

 

For FY2026-27, the government has set a petroleum levy collection target of Rs1.676 trillion, based on an average levy of Rs80 per litre on petrol and diesel.