Pakistan’s circular debt will be fully eliminated within six years following a landmark Rs1.225 trillion financing agreement with 18 banks, Federal Minister for Power Sardar Awais Ahmed Khan Leghari announced, emphasizing that the plan imposes no additional burden on consumers.
Addressing a press conference on Friday, Leghari criticized the previous government for worsening the crisis, noting that circular debt stood at Rs1,100 billion in 2018 and surged to Rs2.28 trillion by 2022 under the PTI-led administration. When the current government took office last year, the debt had reached around Rs2.4 trillion.
Through improved recoveries, controlled theft, financial discipline, and renegotiated contracts with Independent Power Producers (IPPs), the government secured Rs780 billion in relief, bringing the stock down to Rs1,614 billion as of June 2025. Favorable financing terms at KIBOR minus 0.9% — the first of its kind in Pakistan — will save 3.5–5% in interest costs, Leghari said.
He added that the Rs3.23 per unit surcharge currently paid by consumers will also be gradually phased out within five to six years. The minister credited Prime Minister Shehbaz Sharif’s leadership and the joint efforts of federal institutions and DISCO boards for improved governance, noting that losses have decreased and the burden on industrial and domestic consumers has reduced by up to 38% and 50% respectively.
Leghari described circular debt as a “curse” for Pakistan and said that this structured plan, developed with transparency and discipline, marks the first time in the country’s history the issue is being addressed systematically. He stressed that eliminating circular debt will strengthen the energy sector and bolster the national economy.
