The Power Division on Friday presented its strategy to address the circular debt, which currently stands at Rs 2,429 billion, to the National Assembly. Minister for Power Division Sardar Awais Khan Leghari stated that the circular debt was being managed under the Circular Debt Management Plan and that ongoing efforts by the Task Force, Ministry of Energy, and Ministry of Finance were focused on reducing the debt.
In response to a question by Mirza Ikhtiar Baig, Leghari explained that Rs 1.2 trillion was being arranged to finance and refinance the current circular debt stock.Â
The loan, with a tenure of six years and an interest rate set at KIBOR minus 0.9%, will be repaid through the debt service surcharge collected from electricity consumers.
The minister also clarified that the savings achieved from negotiations with Independent Power Producers (IPPs) would be distributed over the remaining terms of their contracts. He emphasized that the primary benefit of these savings would be passed on to consumers, although a portion would be utilized to reduce the circular debt.
Tariff adjustments await NEPRA’s nod
On the other hand, the Power Division is currently unable to determine whether electricity tariffs for distribution companies (Discos) will rise or fall starting July 1, 2025, pending the approval of cost components submitted to the National Electric Power Regulatory Authority (NEPRA).Â
During a public hearing on the interim distribution and supply tariffs for the fiscal year 2025-26, Mehfooz Bhatti, Additional Secretary of Power Finance, explained that while the exact tariff adjustments are still under review, the government aims to address financial imbalances and operational inefficiencies in the sector.
Eight Discos—GEPCO, QESCO, MEPCO, SEPCO, HESCO, PESCO, TESCO, and HAZECO—have filed tariff petitions under the Multi-Year Tariff (MYT) regime for the 2025-26 to 2029-30 period. Collectively, they seek approval for a combined revenue requirement of over Rs455.6 billion for the upcoming fiscal year. These companies’ requests include a range of financial allocations, including pay and allowances, depreciation costs, and other operational expenses.
Aamir Sheikh, a representative of the textile sector, raised concerns about the impact of the proposed tariff changes, emphasising the need for stability in energy costs, particularly since textile producers have already booked export orders at current rates. In response, the FBR Chairman, Rashid Mahmood Langrial, highlighted that the final rates would be determined once the distribution margins are finalised by NEPRA.
The committee also discussed the ongoing challenges faced by Discos, including rising operational inefficiencies and the burden of technical and commercial losses. Tanveer Barry from the Karachi Chamber of Commerce and Industry (KCCI) criticised the increasing losses and called for an independent audit of Disco operations to provide NEPRA with accurate data.
Amid these discussions, the FBR is also facing pressure from various sectors to reduce the taxes on energy-intensive industries. In the case of HESCO, the company sought Rs39.4 billion in revenue for FY 2025-26, with significant portions allocated to operational expenses and prior year adjustments.
Despite these concerns, the Power Division emphasized that it is actively working with NEPRA to finalize the tariff structure and address the discrepancies, with a major focus on reducing the financial burden on consumers while improving the efficiency of Discos.
