Pakistan’s power sector circular debt has surged by a staggering Rs 47 billion in July 2025 alone, a clear sign that government reforms and oversight have failed to fix the bleeding.
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At the heart of this crisis are the chronically underperforming power distribution companies (DISCOs), whose inefficiencies caused a massive Rs 87 billion loss in July — more than double last year’s Rs 42 billion.
The total circular debt now stands at Rs 1.6 trillion, just a hair below last year’s Rs 2.3 trillion, reversing hard-won progress. Instead of reducing debt as it did last year, the sector is once again piling on liabilities — a dangerous trend for an already fragile economy.
Payables to power producers jumped to Rs 908 billion in July, up 5.5% from the previous month, threatening fuel supply stability. GENCOs’ dues to fuel suppliers stayed frozen at Rs 93bn, while Power Holding Limited (PHL) debt remained at a suffocating Rs 660 billion, with no repayments made on principal or markup.
Even more alarming, this Rs 47bn debt spike happened despite partial offsets — Rs 72bn worth of prior-year recoveries and cost adjustments. DISCO inefficiencies alone added Rs 41bn, under-recoveries Rs 46bn, and K-Electric’s non-payments tacked on another Rs 3bn.
Last year, the government slashed circular debt by Rs 801bn through stock settlements. This year, it has done nothing, allowing the debt to spiral again — signaling a dangerous slide back into the very crisis authorities claimed to have solved.