ISLAMABAD: Pakistan’s power sector circular debt rose by Rs79 billion in the first quarter (July–September) of the current fiscal year, reaching Rs1.693 trillion, according to a quarterly report released by the Power Division.
The report noted that the new fiscal year began with Rs1.614tr in circular debt, compared to Rs2.467tr during the same period last year. Despite the increase, the stock remains significantly lower than last year’s level, which was reduced by Rs780bn through capital injections and Rs1.225tr in commercial borrowing.
The Power Division attributed the Rs79bn rise primarily to inefficiencies in distribution companies (Discos) and seasonal factors affecting bill recovery, though the increase was smaller than the Rs239bn recorded in the same period last year.
Payables to power producers climbed to Rs944bn at the end of September from Rs861bn at the start of the fiscal year, while debt parked in the Power Holding Company remained unchanged at Rs660bn.
The report estimated that without additional subsidies and prior-year recoveries totaling Rs198bn, the circular debt would have surged by Rs276bn, driven by Rs67bn in interest costs, Rs5bn in pending generation expenses, Rs87bn in Disco inefficiencies, and Rs84bn in under-recoveries. Receivables from K-Electric were reported at Rs229bn, including Rs42bn in principal and Rs187bn in markup.
In a statement, the Power Division clarified that the quarterly increase should not be viewed as a renewed upward trend but as a temporary effect of seasonal and operational factors expected to reverse later in the fiscal year.
It also highlighted a Rs67bn reduction in Disco inefficiencies, from Rs239bn last year to Rs171bn this quarter, underscoring ongoing efforts to strengthen operational performance and sustain financial discipline in the power sector.
