ISLAMABAD: Pakistan’s power sector circular debt flow increase in first 10 months, stood at Rs1.857 trillion, driven largely by unpaid dues from Karachi-based K-Electric and delays in government subsidy releases, though authorities say the year-end picture will look markedly different.
The April figure marks Rs240 billion rise from Rs1.614 trillion recorded in June 2025. However, viewed year-on-year, the debt burden has eased considerably, falling Rs557 billion from Rs2.41 trillion in April 2025, reflecting a combination of structured repayments and financial restructuring measures.
Outstanding reconciled dues against Provincial government departments is also under process of at source deduction up to the tune of 25 per cent which will also continue to reducing the circular debt flow. The finance ministry in lead of this exercise as per sources from the Finance Division. This Rs240 billions will be soon paid and there will be zero addition by the end of this financial year.
The Power Division moved quickly to contextualize the April 2026 figure, stressing that the monthly “flow” of circular debt, influenced by seasonal factors such as budget releases, utility settlements and K-Electric payments, is a poor proxy for the overall “stock,” which is measured only at fiscal year’s end.
“At the end of June 2026, the stock will most probably be at 1.614 trillion rupees reflecting zero increase at the close of financial year,” said a Power Division spokesperson. “The reporting of circular debt flow and projecting it as an increase or decrease will not reflect true position, therefore instead of reporting April 2026 circular debt flow, it is advisable to wait for just few days and report on entire year to save the readers from any confusion.”
Power Distribution Companies (Discos), have also contributed to improvement. Operational inefficiencies in the sector fell by Rs66 billion during July–April FY2025-26 compared to the same period a year earlier, pointing to tighter enforcement and governance across the grid.
The most troubling outlier remains K-Electric. The private utility’s unpaid dues to the government ballooned to Rs363 billion by April 2026, a jump of more than 58 percent from Rs229 billion in April 2025. Of that total, Rs164 billion represents principal and Rs199 billion is accumulated markup, liabilities that have piled up largely after K-Electric secured a court stay on its multi-year tariff determination, effectively halting its payments to the national grid.
The government says it remains committed to its Circular Debt Management Plan, which sets zero net addition to circular debt as the target for the close of FY2025-26, a milestone that, if achieved, would mark the first year of no increase to the stock of circular debt.
