PTBP Web Desk
The Power Division has reported that Pakistan circular debt reached Rs1,837 billion as of February 2026, highlighting ongoing financial challenges in the country’s power sector. According to officials, the increase observed since June 2025 is temporary and largely attributed to timing differences in payments and accounting cycles rather than a structural surge.
Authorities emphasized that the overall circular debt flow remains within the prescribed targets outlined in the Circular Debt Management Plan. They added that such fluctuations are common in the short term and do not directly impact end consumers.
Officials from the Power Division stated that the government remains committed to clearing circular debt by the end of the fiscal year in line with its long-term strategy. The broader objective is to eliminate circular debt through a structured reform program without placing additional burden on electricity tariffs.
The Circular Debt Management Plan is designed to address inefficiencies across the power value chain, including generation, transmission, and distribution. The plan focuses on improving financial discipline, reducing losses, and strengthening governance mechanisms.
A Power Division spokesperson highlighted that Distribution Companies (DISCOs) have shown noticeable improvements in operational performance. During the period from July 2025 to February 2026, inefficiencies declined by Rs48 billion compared to the same period last year.
This improvement reflects better governance, enhanced recovery mechanisms, and stronger financial controls across the power sector. Reduced inefficiencies are considered a positive sign, as they help limit the accumulation of new circular debt.
The spokesperson further clarified that the power sector budget remains fixed at Rs893 billion, as previously approved by the government. No additional supplementary grant has been sanctioned so far.
This indicates that fiscal planning in the energy sector is being maintained within existing allocations, despite ongoing challenges related to circular debt and sectoral inefficiencies.
At the same time, targets related to circular debt reduction, recovery rates, and transmission & distribution (T&D) losses for June 2027 are currently under review and have not yet been finalized.
The Power Division also addressed concerns regarding payments to Independent Power Producers (IPPs). Officials clarified that all payments, including those to IPPs operating under the China-Pakistan Economic Corridor (CPEC), are made from a centralized pool.
These payments are processed strictly according to contractual obligations and entitlements, without any preferential treatment. This approach is intended to ensure transparency and fairness in financial dealings with power producers.
