ISLAMABAD: Pakistan’s Power Division on Thursday rejected a recent report by National Electric Power Regulatory Authority, saying it misrepresents the performance of distribution companies and overlooks a “historic turnaround” that cut circular debt by Rs780 billion in the fiscal year 2024-25.
In a detailed rebuttal, the division said circular debt fell from Rs2.393 trillion in FY2024 to Rs1.614 trillion in FY2025, describing the reduction as ‘unprecedented’ in the sector’s history. It attributed the improvement to Rs193 billion in better performance by power distribution companies (Discos), Rs260 billion in late payment interest (LPI) waivers negotiated with power producers and over Rs300 billion in gains from improved macroeconomic indicators.
The Power Division said the Rs193 billion contribution from Discos stemmed from tighter operational and financial discipline, arguing that the regulator’s assessment failed to reflect progress made on the ground.
According to the statement, recovery rates surged from 92.4pc in FY2024 to 96.6pc in FY2025, a 4.2 percentage point increase driven by stricter enforcement against defaulters and improved billing accuracy. The financial impact of under-recoveries dropped by Rs183 billion, falling from Rs315 billion to Rs132 billion, a 42 percent reduction that significantly slowed the buildup of circular debt.
Transmission and distribution losses also narrowed from 18.3 percent to 17.6 percent during the year, a 0.7 percentage point decline that generated estimated savings of Rs11 billion by reducing system inefficiencies. Addressing criticism over loadshedding, the division said economic-based power cuts are in line with the National Electricity Policy and Plan to ensure financial sustainability. It warned that removing aggregate technical and commercial (AT&C)-based loadshedding without an alternative framework would add more than Rs500 billion in annual financial burden. The government, it added, is transitioning toward transformer-level targeted loadshedding as part of ongoing digitalization reforms.
“We do not deny that legacy challenges remain. However, the numbers now speak for themselves: record-high recovery rates, a 42% cut in under-recoveries, measurable reduction in T&D losses, and a historic Rs780 billion reduction in circular debt — with Discos contributing Rs193 billion of that relief,” the division said.
“We urge Nepra, policymakers, and the public to view these verified achievements as evidence that the reforms are working and that the power sector is firmly on the path to recovery,” it added.
