The Power Division has announced that Pakistan’s energy sector reforms have reduced circular debt by Rs. 779 billion, bringing the total down by nearly 33 percent during the fiscal year 2024-25.
According to the Power Ministry, circular debt declined from Rs. 2.393 trillion in FY2023-24 to Rs. 1.614 trillion in FY2024-25, following a series of reform measures aimed at improving financial stability in the power sector.
The ministry also reported a significant reduction in electricity distribution losses, highlighting improvements in the performance of power distribution companies (DISCOs).
A spokesperson for the Power Division said that the federal budget had allocated Rs. 893 billion for the power sector in FY2025-26. However, Rs. 98 billion was later reduced from the allocation. The spokesperson claimed that if the full amount had been released, circular debt could have fallen further to around Rs. 1.577 trillion.
The reduction in budgetary support contributed to a Rs. 61 billion increase in circular debt during FY2025-26, which the ministry attributed to funding constraints.
The Power Division highlighted improvements in DISCO performance, stating that losses declined from Rs. 591 billion in FY2023-24 to Rs. 397 billion in FY2024-25, marking a reduction of Rs. 193 billion.
During FY2025-26, DISCO losses reportedly dropped by another Rs. 71 billion to Rs. 326 billion, bringing the total reduction over two years to Rs. 265 billion, or nearly 45 percent.
The ministry said the continued decline in circular debt and distribution losses reflects the impact of ongoing power sector reforms. It added that efforts will continue to strengthen the energy sector, improve financial performance, and enhance services for consumers.
