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Pakistan circular debt on the rise

In a recent declaration by the Power Division, it has been reported that Rs. 31 billion worth of debt has amounted from the distribution companies while Rs. 65 billion with regard to unpaid subsidies and Rs. 34 billion due to high interest as a consequence of non-payment of dues.

Circular debt has risen to Rs. 156 billion in just five months

Furthermore, Rs. 33 billion worth of markup of Power Holding Company along with Rs. 103 billion in generation cost and Rs. 34 billion for K-Electric. Altogether, the circular debt increased by Rs. 300 billion but due to prior adjustments of approximately Rs. 145 billion of consumer tariff, the circular debt has risen to Rs. 156 billion in just five months.

According to the Power Division, a management plan to curtail the rise in circular debt is being devised. It is estimated that the total rise in circular debt in the FY19-20 amounted to Rs. 538 billion at a rate of about Rs45 per month.

During the July-November 2019-20 period, circular debt increased by Rs179bn at a rate of Rs36 per month, while it slightly reduced to Rs156bn during July-November 2020-21 at a rate of Rs31.2bn per month

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