Federal cabinet okays debt plan to restore financial stability in energy industry

The federal cabinet on Wednesday gave the green light to Pakistan's largest financial restructuring scheme aimed at eliminating the crippling circular debt in the power sector.

Prime Minister Shehbaz Sharif chaired the federal cabinet meeting at the Prime Minister's House and approved a series of key decisions ranging from energy sector reforms to diplomatic and institutional recognitions, a Prime Minister's Office news release said.

The debt plan, designed to restore financial stability in the energy industry without burdening the national budget, aims to eliminate Rs1,275 billion in circular debt over the next six years.

The approved scheme includes refinancing Rs683 billion owed by the Power Holding Company and clearing long-standing dues of Independent Power Producers (IPPs).

PM Shehbaz termed the decision a "historic step toward economic stability and investor confidence in Pakistan’s energy sector."

"This reflects our commitment to sustainable institutional reforms and reducing fiscal pressure, paving the way for a more stable and prosperous energy future," he said during the session.

The cabinet also extended appreciation to Finance Minister Muhammad Aurangzeb and his economic team for presenting a public-friendly budget for the upcoming fiscal year, acknowledging their efforts in stabilising the national economy.

On the diplomatic front, Premier Shehbaz lauded Chief of Army Staff (COAS) Field Marshal Syed Asim Munir for his address to the Pakistani diaspora during his recent US visit.

The prime minister commended the army chief's firm commitment to defending Pakistan's borders and interests, calling it a powerful representation of national resolve.

In recognition of exemplary Hajj arrangements this year, the premier paid tribute to Minister for Religious Affairs Sardar Yousaf, citing the well-managed pilgrimage as a reflection of the government's commitment to public service excellence.

In other key decisions, the cabinet approved the appointment of Kamal Uddin Tipu as Chairperson of the Commission for the Protection of Journalists and Media Professionals on the recommendation of the Ministry of Human Rights.

The cabinet also granted an exemption under Section 21 of the Public Procurement Regulatory Authority Ordinance, 2002, to the National Power Parks Management Company Limited (NPPMCL) for procurement related to the acquisition of the Rousch Power Plant.

Additionally, the cabinet ratified the decisions taken during the Cabinet Committee on Legislative Cases meeting held on May 21, 2025.