Pakistan’s power sector circular debt remained limited to an increase of Rs 75 billion during the first six months of fiscal year 2025–26 (July to December), bringing the total stock down to Rs 1.689 trillion. This reduction became possible after the federal government released an approved subsidy of Rs 200 billion.
According to sources, out of the Rs 200 billion, Rs 105 billion was provided by the Ministry of Finance to the Power Division as a technical supplementary grant, while the remaining Rs 95 billion was released by the Power Division from its own budget head as government equity investment in DISCOs.
During the same period last fiscal year, the circular debt stood at Rs 2.384 trillion, with only a marginal reduction of Rs 9 billion recorded. For the first quarter of FY 2025–26, the Power Division had set a target to cap circular debt at Rs 1.766 trillion, while the actual figure remained lower at Rs 1.693 trillion. For the second quarter, the target was Rs 1.890 trillion, but the actual stock declined to Rs 1.689 trillion, reflecting a net increase of Rs 75 billion.
Sources stated that payables to power generation companies declined to Rs 903 billion, compared to Rs 1.615 trillion during the same period last year. Payables of GENCOs to fuel suppliers slightly increased to Rs 91 billion from Rs 86 billion last year. No funds were transferred to Power Holding Limited during July to December FY 2025–26, whereas Rs 683 billion had been recorded during the same period last year.
Subsidies allocated in the budget but not released stood at negative Rs 42 billion, while unclaimed subsidies were reported as zero. Interest expenses dropped sharply to Rs 10 billion from Rs 56 billion last year, although outstanding interest increased to Rs 11 billion.
Non-payment by K-Electric rose to Rs 115 billion, compared to Rs 12 billion in the same period last year. Total recoveries amounted to Rs 329 billion, including Rs 136 billion in principal and Rs 193 billion in markup.
According to Power Division sources, DISCO losses declined to Rs 101 billion, while under-recovery reduced to Rs 9 billion. Other adjustments stood at Rs 95 billion. Overall, the circular debt flow increased by Rs 299 billion, but after payments of Rs 224 billion, the net increase was contained at Rs 75 billion.
The Power Division has projected that circular debt will rise to Rs 1.802 trillion in the third quarter and decline to Rs 1.614 trillion by the end of the fiscal year.
