Islamabad, 29 Apr, 2025: Pakistan’s power sector has shown signs of financial recovery as the country’s circular debt decreased to Rs2.396 trillion by the end of March 2025, reflecting a year-on-year improvement.
Though the total grew slightly by Rs2 billion since July 2024, the overall reduction of Rs398 billion from the same period last year highlights efforts to stabilise the sector’s fiscal burden.
A detailed report released by the Power Division revealed that outstanding payments to independent power producers (IPPs) rose by Rs33 billion in the current fiscal period, reaching Rs1.633 trillion. This figure was Rs1.60 trillion at the start of the financial year.
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However, payables owed by public generation companies (Gencos) to fuel providers dropped significantly from Rs110 billion in July 2024 to Rs79 billion by March.
The debt held by Power Holding Limited (PHL) a government-owned special purpose vehicle remained steady at Rs683 billion.
Meanwhile, federal receivables from K-Electric stood at over Rs223 billion, which includes Rs186.5 billion in accumulated markup on a base liability of Rs36.5 billion.
By the close of March 2025, Pakistan’s power sector had recorded a Rs15 billion increase in circular debt since November 2024, but all key components posted declines when compared with March 2024.
IPP dues dropped by Rs296 billion, Genco liabilities fell by Rs20 billion, and PHL debt reduced by Rs82 billion.
Authorities attribute the improvement largely to better recovery mechanisms. These include the implementation of quarterly tariff adjustments (QTAs) and fuel price adjustments (FPAs).
Which led to an over-collection of Rs110 billion in pending generation costs within the first nine months of the fiscal year though lower than last year’s Rs145 billion.
An additional Rs38 billion was also recovered through adjustments related to previous years.Despite progress in managing debt, the performance of power distribution companies (Discos) remains a concern.
Efficiency losses rose to Rs143 billion by March 2025, up from Rs102 billion in the same month last year. Nonetheless, this figure remains below the Rs276 billion inefficiency loss recorded at the end of the previous financial year.
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Under-recoveries by Discos also fell significantly to Rs78 billion, compared to Rs262 billion during the same period a year earlier.
In a positive development, the Finance Division overpaid subsidies by Rs3 billion eliminating the need for bank interest payments this fiscal year.
