Pakistan’s power sector has reported a significant reduction in circular debt and distribution losses as ongoing reforms continue to show results.
The Power Division stated that circular debt declined sharply during recent fiscal years. The reduction reflects efforts aimed at improving financial management and reducing inefficiencies across the electricity sector.
Circular Debt Drops Significantly
According to the Power Division, circular debt decreased from Rs2,393 billion in fiscal year 2023-24 to Rs1,614 billion in 2024-25.
The division said the improvement was achieved through continued reforms and better control over sector-related challenges.
However, a reduction of Rs98 billion in the budget allocation for fiscal year 2025-26 affected the pace of progress. The Power Division explained that this financial adjustment resulted in a Rs61 billion increase in circular debt during the current fiscal year.
It added that if the complete budget allocation had been provided, circular debt could have fallen further to Rs1,577 billion.
Distribution Losses Also Decline
Along with circular debt, the power sector has also witnessed a notable decline in distribution losses.
The Power Division reported that losses decreased from Rs591 billion in 2023-24 to Rs397 billion in 2024-25.
This represents a reduction of Rs193 billion within one year.
Furthermore, losses were reduced to Rs326 billion during the current fiscal year, showing continued improvement in the sector’s performance.
Reforms Delivering Positive Results
The Power Division described the decline in circular debt and distribution losses as evidence that power sector reforms are producing positive outcomes.
According to the statement, the improvements demonstrate progress toward creating a more efficient and financially stable electricity system.
The division also clarified that the budget reduction was a temporary financial factor. It said the adjustment did not reflect any decline in the overall performance of ongoing reforms.
Focus Remains on Improving Power Sector Efficiency
Reducing circular debt has remained one of the biggest challenges for Pakistan’s energy sector. Therefore, controlling losses and improving financial discipline remain key priorities.
The latest figures indicate progress in addressing long-standing issues affecting the power sector.
Moreover, the decline in losses suggests that reform measures are helping improve operational efficiency. However, maintaining this progress will require continued efforts to manage financial pressures and strengthen the electricity system.
The Power Division said the recent developments highlight the impact of reforms and provide a positive outlook for future improvements in Pakistan’s power sector.
