KARACHI: A Power Division spokesperson said on Wednesday the Rs79 billion increase in the circular debt (CD) during the first quarter of the fiscal year (FY) 2025-26 was “attributable to seasonal and operational factors”.
The development came as reports appeared that the circular debt had risen by Rs79 billion in Q1 FY2025-26, contrary to Pakistan government’s commitment to contain the CD.
The circular debt refers to a chain of unpaid bills and financial obligations that accumulate within the energy sector.
The spokesperson said the increase of Rs79 billion “must be viewed in full context”.
“During the same quarter last year, circular debt had increased by Rs73 billion; however, by the end of that fiscal year, the overall stock of circular debt was reduced by Rs780 billion.
“The current quarterly rise is therefore attributable to seasonal and operational factors that typically influence monthly flows and are expected to reverse over the course of the year,” they said.
The official further said Discos inefficiencies during July–September 2025 were reduced by Rs67 billion compared to the same period last year.
“These interim, seasonal fluctuations in circular debt have no impact on consumer-end tariffs, which remain determined through the regular regulatory process,” they said.
In late September, Power minister Awais Leghari said the circular debt would be brought down to zero in the next six years. The CD had been brought down to Rs899 billion from approximately Rs2.4 trillion, he informed then in a video message.
Pakistan’s power sector circular debt stood at Rs1.66 trillion in July 2025, declining sharply by 29.3% from Rs2.35 trillion in July 2024, according to data compiled by Arif Habib Limited (AHL).
