Pakistan’s outstanding power sector circular debt stood at PKR 1,661 billion in July 2025, marking a 2.9% month-on-month rise from PKR 1,614 billion in June, but a significant 29.3% year-on-year decline from PKR 2,351 billion in July 2024, according to data compiled by Arif Habib Limited (AHL).
Within the stock, payables to power producers accounted for the largest share at PKR 908 billion, up 5.5% MoM from PKR 861 billion, but down 41.8% YoY from PKR 1,561 billion.Â
GENCOs’ payables to fuel suppliers remained unchanged at PKR 93 billion, down 13.1% YoY from PKR 107 billion, while the amount parked in Power Holding Limited (PHL) stayed flat at PKR 660 billion, 3.4% lower than PKR 683 billion in July 2024.
On a fiscal year-to-date (FYTD) basis, circular debt increased by PKR 47 billion in July 2025, compared with a reduction of PKR 42 billion in the same period last year and PKR 45 billion in June 2025. The FYTD rise was primarily driven by DISCO underperformance, which contributed approximately PKR 87 billion in losses and under-recoveries, down from PKR 147 billion in the comparable period last year.
Other factors contributing to the FYTD increase included budgeted but unreleased subsidies of PKR 35 billion, pending generation cost adjustments of −PKR 6 billion, and non-payment by K-Electric of PKR 3 billion. Prior-year recoveries and other adjustments reduced the burden by PKR 72 billion, while DISCO inefficiencies added PKR 41 billion and under-recoveries contributed PKR 46 billion.
The report highlights that, despite the month-on-month increase, the overall stock of circular debt fell sharply year-on-year, underscoring ongoing improvements in sector financial management even as DISCO inefficiencies continue to drive short-term increases.
