Power sector circular debt soars to Rs2.63tr

Govt had previously assured the IMF of maintaining the power sector's circular debt at Rs2.31tr

MULTAN: The power sector’s circular debt has escalated to Rs2,635 billion as of January 2024.

A report from the Power Division, highlights that despite significant hikes in power tariffs and fuel adjustments, circular debt continued to rise. From June 2023, when the debt stood at Rs2,310 billion, there has been an increase of Rs325 billion over the subsequent seven months.

The report attributes this rise in circular debt partly to the poor performance and low collection rates by Distribution Companies (DISCOs).

The International Monetary Fund (IMF) has urged Pakistan to reduce the circular debt in the power sector and to increase electricity and gas prices as part of the conditions for a new loan program.

The Pakistani government had previously assured the IMF that it would maintain the power sector’s circular debt at Rs2.31 trillion.

This commitment was discussed in detail before the Senate Standing Committee for Power, where Power Division officials confirmed that the debt was managed at Rs2.31 trillion as of June 2023.

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