Power sector circular debt swells again to Rs1.66tr in July, up Rs47bn

ISLAMABAD: Pakistan’s power sector circular debt again climbed to Rs1.66 trillion in July 2025, up Rs47 billion from the previous month, despite the government’s plan to gradually eliminate the debt stock, official data showed.

As per the Power Division data, this Rs47 billion increase in one month is the rise in the payables to power producers (IPPs). The stock of the debt was at Rs1.61 trillion by end-June 2025.

In early August, the power division had reported to Nepra that it has slashed power sector circular debt by Rs780 billion to Rs1.614 trillion, what it credited to lower line losses, improved bill recovery and savings from renegotiated Independent Power Producer (IPP) contracts. Officials said better Disco performance saved Rs200 billion, with other interventions trimming costs further.

Notably, in June 2025, the federal cabinet approved a key plan to gradually retire the circular debt stock, including permission to borrow Rs1.275 trillion from commercial banks at the lowest available rates. Officials say the strategy aims to ease financial pressure on the power sector while reducing reliance on expensive borrowing. The persistence of debt growth in July, however, highlights the government’s challenge in stabilising the sector, which has long been weighed down by inefficiencies, line losses, and delayed payments to power producers.