Power division dismisses Rs224bn circular debt claims, says net flow under Rs80bn

The Ministry of Energy Power Division on Monday rejected media reports alleging a Rs224 billion rise in circular debt flow from July to November 2025, calling the claims misleading, factually incorrect and based on incomplete data.

A spokesperson for the Power Division said circular debt flow declined in December 2025, bringing the net increase to less than Rs80 billion for the July to December 2025 period.

He said the report incorrectly compared circular debt stock as of June 30, 2025 with figures at the end of November 2025, noting that the latter reflects only three months and does not provide a like for like comparison. The spokesperson added that a proper comparison would have been between July to November 2025 and the corresponding period of July to November 2024.

According to the ministry, increases in circular debt during the July to November period are largely driven by seasonal factors that influence monthly flows and are typically reversed in the latter part of the fiscal year.

The spokesperson said the report also wrongly linked changes in circular debt to the bank refinancing agreement signed in September 2025. He clarified that the agreement was intended to replace expensive Pakistan Holding Private Limited debt with cheaper financing under a five to six year repayment plan and was not designed to immediately reduce or increase circular debt flow.

He said the same media report acknowledged that circular debt stock declined to Rs1,614 billion by June 2025, reflecting a significant reduction during FY 2024 25. This improvement, he added, was achieved through better operational performance of power distribution companies, improved macroeconomic conditions and the waiver of late payment interest following negotiations with independent power producers.

The ministry expects the circular debt position to be fully contained by the end of the current fiscal year, with no net addition to the overall stock, consistent with historical patterns where seasonal fluctuations normalize later in the year.

The spokesperson said seasonal movements in circular debt have no impact on consumer electricity tariffs.

He further said inefficiencies at power distribution companies were reduced by Rs193 billion in FY 2024 25 compared to FY 2023 24, while inefficiencies during July to December 2025 fell by a further Rs49 billion compared to the same period last year.

He added that the Rs1,225 billion circular debt settlement plan is being implemented over six years, under which existing debt stock will be refinanced on favourable terms. The first tranche has already been received, and the remaining stock is expected to be eliminated over the next six years, along with the discontinuation of the debt service surcharge.