ISLAMABAD: Although the power sector circular debt has been reduced to Rs1,614 billion from Rs2,393 billion, system losses continue to haunt the sector, remaining high at Rs397 billion, as revealed in the circular debt report uploaded on the Power Division’s official website.
This means that electricity theft and recovery losses are placing a burden of Rs3.9 per unit on the electricity tariff.
“We have reduced the system losses by Rs194 billion, from Rs591 billion in 2023-24 to Rs397 billion in 2024-25, and the prime minister has appreciated this endeavor by the Power Division,” an official said.
According to the circular debt report, payables to power producers have dwindled to Rs861 billion from Rs1,600 billion, and payables to fuel suppliers have been slashed to Rs93 billion from Rs110 billion
The government has already arranged a loan of Rs1,275 billion from 18 commercial banks for which the signing ceremony is likely to be held on August 25. After this, loans of Rs660 billion parked in the Power Holding Limited (PHL) would be immediately paid and the remaining amounts would be used to offload interest-based loans of the government power plants and dues of CPEC power houses.
This is how the circular debt in the power sector would be slashed down to Rs339 billion from Rs1614 billion. However, the interest charges on the loans of PHL and IPPs stand at Rs58 billion, which were at Rs138 billion till June 2024. The pending generation cost under the head of quarterly tariff adjustment and Fuel Charges Adjustment has reduced to Rs85 billion on June 30, 2025 from Rs145 billion in June 2024.
However, the Discos’ losses have reduced to Rs265 billion and recovery losses to Rs132 billion on June 30, 2025, which is still alarmingly high. The prior year recovery losses stood at Rs358 billion. The government needs to pay a stock of Rs801 billion with PHL principal repayments of Rs24 billion.
After payments of Rs1,275 billion by CPPA (Central Power Purchase Agency), the circular debt will be reduced to Rs339 billion. This remaining stock of Rs339 billion will be dealt with through reforms and improved efficiency of Discos.
The electricity consumers will retire the loan of Rs1,275 billion through the Debt Service Surcharge (DSS) of Rs3.23 per unit that is already in place.