ISLAMABAD: The country’s power sector circular debt flow declined to Rs75 billion during the first six months (July– December) of FY 2025–26, bringing the total stock down to Rs1.689 trillion, following the injection of a Rs200 billion subsidy approved by the federal government.
Of the Rs200 billion, Rs105 billion was released to the Power Division as a Technical Supplementary Grant (TSG) from the Finance Division (Demand No47), while the remaining Rs95 billion was provided from the Power Division’s own Demand No35 under the head of Government of Pakistan investment in DISCOs’ equity.
During the corresponding period of FY 2024–25, the circular debt stock stood at Rs2.384 trillion, with a marginal negative flow of Rs9 billion.
READ MORE: July-Oct: power sector circular debt stands at Rs1.817trn
The Power Division had targeted circular debt at Rs1.766 trillion for the first quarter (July–September) of FY 2025–26; however, the actual figure stood at Rs1.693 trillion. For the second quarter (October–December), the target was Rs1.890 trillion, but the stock remained lower at Rs1.689 trillion, reflecting an addition of Rs75 billion.
Official documents reveal that payables to power producers declined to Rs903 billion during the first half of FY 2025–26 from Rs1.615 trillion in the same period of FY 2024–25. Payables of GENCOs to fuel suppliers increased slightly to Rs91 billion, compared to Rs86 billion last year. Meanwhile, the amount parked in Power Holding Limited (PHL) remained zero during July–December FY 2025–26, against Rs683 billion in the corresponding period of the previous fiscal year.
Budgeted but unreleased subsidies stood at negative Rs42 billion, compared to negative Rs8 billion in the same period last year, while unclaimed subsidy amounts were reported as nil.
Interest charges (PHL–IPPs) declined sharply to Rs10 billion during the first six months compared to Rs56 billion in FY 2024–25, reflecting a reduction of Rs46 billion. However, pending interest increased to Rs11 billion, compared to negative Rs67 billion in the corresponding period last year.
Non-payment by K-Electric (KE) surged to Rs115 billion, compared to Rs12 billion in the same period of the previous fiscal year. The stock of receivables stood at Rs329 billion, including Rs136 billion in principal and Rs193 billion in markup.
According to the Power Division, DISCOs’ losses and inefficiencies declined to Rs101 billion during the first half of the current fiscal year, compared to Rs106 billion in the same period of FY 2024–25. Under-recoveries also dropped sharply to Rs9 billion, from Rs52 billion a year earlier.
Other adjustments amounted to Rs95 billion during July–December FY 2025–26, against negative Rs140 billion in the corresponding period last year. Overall, the flow of circular debt increased by Rs299 billion during July–December FY 2025–26, compared to Rs11 billion in the same period of FY 2024–25.
However, after stock payments of Rs224 billion, the net circular debt flow was reduced to Rs75 billion.
The Power Division has projected circular debt at Rs1.802 trillion during the third quarter of FY 2025–26, which is expected to decline further to Rs1.614 trillion by the fourth quarter (July–June) of the fiscal year.
Copyright Business Recorder, 2026