Pakistan has reduced its power sector circular debt by Rs780 billion, bringing it down to Rs1.614 trillion, with the government citing lower line losses, improved bill recovery, and savings from renegotiated Independent Power Producer (IPP) contracts as the key factors.
The Power Division shared the reduction with the National Electric Power Regulatory Authority (Nepra) during a public hearing on distribution companies’ (Discos) petition for the fourth-quarter tariff adjustment (QTA) for the previous fiscal year.
According to officials, better performance by Discos saved around Rs200 billion, with other measures contributing to further reductions.
However, industrialists have expressed concerns that the relief may be temporary, accusing the government of relying on bank loans to reduce arrears. Power Division officials stated that an additional Rs1.275 trillion is being raised from banks to further cut the circular debt, but they emphasized that this borrowing would not necessitate a separate surcharge for repayment.
The hearing also highlighted discrepancies between official data showing a 49% rise in industrial power consumption and industry claims of factory shutdowns. Nepra Member Maqsood Anwar questioned, “If industries are consuming more power, why are they claiming closures?” Officials clarified that several power plants and the Neelum-Jhelum hydropower project were offline, yet industrial consumption grew as industries shifted from captive power generation to distribution companies. Nepra called for a detailed briefing on this shift.
The session also revealed 128,000 pending new connection applications, representing a potential 1,070 megawatts of load, and 4,000 pending net metering requests, with half of these in Faisalabad Electric Supply Company (Fesco). Additionally, nearly 70,000 defective meters remain in use.
Quetta Electric Supply Company (Qesco) CEO reported that 13,000 to 14,000 agricultural tube well connections had been disconnected following the prime minister’s directive to transition to solar energy. This move has led to a reduction in electricity consumption in Qesco’s service area.
Nepra confirmed it would issue its final QTA decision after reviewing all data and stakeholder feedback.
