Power Division says Nepra report ignores Rs780 billion reduction in circular debt

The Power Division on Thursday rejected a recent report by the National Electric Power Regulatory Authority (NEPRA), stating that it overlooks improvements in the power sector and a reduction of Rs 780 billion in circular debt during FY2024-25.

In a statement, the division said circular debt declined from Rs 2.393 trillion in FY2024 to Rs 1.614 trillion in FY2025. It attributed the reduction to improved performance by distribution companies, waivers in late payment interest and gains linked to macroeconomic indicators.

According to the division, distribution companies contributed Rs 193 billion through improved operational and financial discipline. It said recovery rates increased from 92.4% in FY2024 to 96.6% in FY2025, while the financial impact of under-recoveries declined from Rs 315 billion to Rs 132 billion, a reduction of 42%.

Transmission and distribution losses fell from 18.3% to 17.6% during the year, generating estimated savings of Rs 11 billion.

The division said Rs 260 billion was secured through negotiated late payment interest waivers with power producers and more than Rs 300 billion in gains resulted from improved macroeconomic conditions.

Responding to criticism over load shedding, the division said economic-based power cuts are implemented under the National Electricity Policy to maintain financial stability. It stated that eliminating aggregate technical and commercial loss-based load shedding without an alternative mechanism could add over Rs 500 billion annually to the financial burden.

The government is moving toward transformer-level targeted load shedding under ongoing digitalisation reforms, the statement added.

The division maintained that while structural challenges remain, improved recovery rates, lower under-recoveries, reduced losses and lower circular debt indicate progress in the power sector.