- July 29, 2026
- Posted by: Tresmark
- Category:
The government on Tuesday said power sector circular debt increased by PKR 61 billion during FY2025-26, attributing the rise to a reduction in budgeted funding rather than a weakening of sector performance.
According to the Power Division, circular debt had declined from PKR 2.393 trillion in FY2023-24 to PKR 1.614 trillion in FY2024-25, reflecting the impact of structural reforms and meeting the government's commitment under the IMF programme.
Officials said the federal government had allocated PKR 893 billion for the power sector in the FY2025-26 budget, but a PKR 98 billion reduction in the allocation slowed debt reduction efforts. Had the full amount been released, circular debt would have fallen further to PKR 1.577 trillion, the Power Division said.
The division also highlighted continued improvements in the financial performance of power distribution companies (DISCOs), with losses falling from PKR 591 billion in FY2023-24 to PKR 397 billion in FY2024-25, and further to PKR 326 billion during the current fiscal year. Total losses have been reduced by PKR 265 billion over the past two years.
The government maintained that the increase in circular debt was the result of a one-off budgetary constraint rather than operational setbacks, reaffirming its commitment to ongoing power sector reforms aimed at improving financial sustainability and service reliability.
