Power sector circular debt drops by Rs779bn in one year: Power Division

ISLAMABAD: The Power Division on Tuesday said circular debt in Pakistan’s power sector declined significantly during the last fiscal year, while losses of power distribution companies (DISCOs) continued to fall due to ongoing reforms.

According to the Power Division spokesperson, circular debt decreased from Rs2,393 billion in FY2023-24 to Rs1,614 billion in FY2024-25, reflecting a reduction of Rs779 billion.

The spokesperson said Rs893 billion had been allocated for the power sector in the FY2025-26 federal budget, but Rs98 billion was later cut. Had the full allocation been released, circular debt would have further declined to Rs1,577 billion, the spokesperson added.

The budget reduction, however, led to an increase of Rs61 billion in circular debt during the current financial year.

The spokesperson further said losses of power distribution companies dropped from Rs591 billion in FY2023-24 to Rs397 billion in FY2024-25, and have now been reduced further to Rs326 billion this fiscal year.

Overall, DISCO losses have declined by Rs265 billion over the past two years, from Rs591 billion to Rs326 billion.

The Power Division said the improvement demonstrates that reforms in the energy sector are producing sustained results, adding that the budget cuts were a temporary financial constraint rather than an indication of weak performance. It reaffirmed its commitment to continuing reforms aimed at making the power sector financially sustainable and improving services for consumers.