Power sector debt hits record Rs2.393 trillion

The power sector’s circular debt surged by Rs83 billion during FY 2023-24, bringing the total to Rs2.393 trillion, according to a report presented in the National Assembly on Monday. 

In comparison, the circular debt stood at Rs2.31 trillion in FY 2022-23, reflecting a year-over-year increase of Rs57 billion.

Over the past five years, the circular debt has fluctuated, with reductions of Rs27 billion in FY 2021-22 and sharp increases of Rs130 billion and Rs538 billion in FY 2020-21 and FY 2019-20, respectively. 

The report highlighted that circular debt—caused by non-payments within the energy supply chain—remains a critical challenge, undermining financial stability in the sector.

From July 2023 to June 2024, Independent Power Producers (IPPs) received Rs979.29 billion in capacity payments. Among these, China Power Hub Generation Company collected Rs137 billion, Huaneng Shandong Energy collected Rs113 billion, and Port Qasim Electric Power Company collected Rs120.37 billion.

The report further broke down capacity payments to IPPs: Rs718 billion to coal-powered units, Rs72.63 billion to gas-powered units, Rs106 billion to hydropower IPPs, and Rs81.6 billion to furnace oil-powered producers. These payments burden the sector, contributing significantly to the circular debt crisis.

The report also revealed that employees of power distribution companies (Discos) continue to benefit from billions worth of free electricity. 

Lahore Electric Supply Company (LESCO) alone recorded 6.59 million free units for 35,852 employees, while Islamabad Electric Supply Company’s 20,371 employees received nearly 4 million units monthly.

The widespread provision of free electricity, along with unresolved governance and inefficiencies, exacerbates the financial strain on the energy sector. The total number of Disco employees across Pakistan stands at 188,151, receiving over 34 million free units monthly.

During the session, concerns were raised about the absence of ministers which delayed key discussions. PPP’s Nabeel Gabol announced that an important bill would be introduced on Friday, while other members debated issues related to quorum and legislative procedures.

The circular debt crisis remains a pressing concern, with the government urged to introduce reforms to stabilize the sector and reduce fiscal losses.