ISLAMABAD: The circular debt in Pakistan’s power sector is expected to rise by PKR 735 billion during the current fiscal year, sources have warned.
Officials said the debt could climb from PKR 1,615 billion to approximately PKR 2,300 billion. However, measures such as annual re-basing, reducing distribution company losses, and improving recoveries are expected to limit the increase by PKR 212 billion.
To eliminate the remaining PKR 522 billion, the government plans PKR 120 billion in principal repayments and will settle PKR 400 billion by paying government power plants and IPPs, aiming to maintain a zero circular debt stock.
Sources further explained that, as per International Monetary Fund (IMF) conditions, the power sector’s circular debt must be kept at zero inflow.
Under the Circular Debt Management Plan, PKR 55 billion is expected through annual re-basing, PKR 18 billion from reduced distribution company losses, and PKR 121 billion from improved recoveries.
With these measures in place, authorities aim to maintain circular debt at zero inflow throughout the fiscal year.
