Power Sector Debt Hits PKR 1.66T in July

Pakistan’s power sector circular debt reached PKR 1,661 billion in July 2025, reflecting a 2.9% month-on-month (MoM) increase from PKR 1,614 billion in June 2025, yet a substantial 29.3% year-on-year (YoY) decline from PKR 2,351 billion in July 2024, according to Arif Habib Limited (AHL) data.

The largest portion, payables to power producers, stood at PKR 908 billion, surging 5.5% MoM from PKR 861 billion, but plummeting 41.8% YoY from PKR 1,561 billion. GENCOs’ payables to fuel suppliers remained steady at PKR 93 billion, down 13.1% YoY from PKR 107 billion, while Power Holding Limited (PHL) debt held constant at PKR 660 billion, a 3.4% YoY decrease from PKR 683 billion in July 2024.

On a fiscal year-to-date (FYTD) basis, circular debt grew by PKR 47 billion in July 2025, contrasting with a PKR 42 billion reduction in the same period last year and a PKR 45 billion drop in June 2025. The FYTD rise was largely fueled by DISCO underperformance, contributing PKR 87 billion in losses and under-recoveries, a decrease from PKR 147 billion in the prior year’s period.

Additional factors driving the FYTD increase included unreleased budgeted subsidies of PKR 35 billion, pending generation cost adjustments of −PKR 6 billion, and non-payment by K-Electric of PKR 3 billion. Prior-year recoveries and other adjustments alleviated the burden by PKR 72 billion, while DISCO inefficiencies added PKR 41 billion and under-recoveries contributed PKR 46 billion.

Despite the MoM uptick, the report emphasizes a sharp YoY reduction in circular debt, highlighting ongoing improvements in sector financial management, though DISCO inefficiencies continue to drive short-term increases.