Power Division rejects claims of new circular debt surge, calls it routine adjustment

ISLAMABAD: Spokesperson of the Power Division, while commenting on the impression by certain quarters that the increase of Rs. 79 billion in circular debt (CD) during the first quarter of FY2025-26 reflects a renewed upward trend, contrary to the Government’s commitment to contain circular debt accumulation, categorically stated that this portrayal is not accurate and requires clarification and understanding.

The Spokesperson said that the increase of Rs. 79 billion in Q1 FY2025-26 must be viewed in full context. During the same quarter last year, circular debt had increased by Rs. 73 billion.

However, by the end of that fiscal year, the overall stock of circular debt was reduced by Rs. 780 billion. The current quarterly rise is therefore attributable to seasonal and operational factors that typically influence monthly flows and are expected to reverse over the course of the year, he added.

The Spokesperson said that, importantly, DISCO inefficiencies during July–September 2025 were reduced by Rs. 67 billion compared to the same period last year, underscoring the Government’s firm commitment to improving operational performance and maintaining financial discipline in the power sector.

The Spokesperson further explained that these interim, seasonal fluctuations in circular debt have no impact on consumer-end tariffs, which remain determined through the regular regulatory process.