Rs1.225T Power Debt Resolved, No Consumer Burden

On Thursday, the Ministry of Finance declared that the Rs 1.225 trillion power sector circular debt agreement with 18 banks will impose no additional burden on consumers, as repayments will be covered by the existing Rs 3.23 per unit surcharge.

The Ministry hailed the resolution of the Rs 1.225 trillion circular debt as a pivotal stride toward restoring fiscal discipline, boosting investor confidence, and ensuring energy sector sustainability.

The landmark restructuring resulted from a collaborative effort spearheaded by the Prime Minister’s Task Force on Power, in partnership with the Ministry of Energy, State Bank of Pakistan (SBP), Pakistan Banks Association (PBA), and 18 partner banks. “This milestone underscores the power of unified institutional teamwork to tackle one of Pakistan’s most persistent energy sector challenges,” stated a Ministry press release.

Led by Minister of Power Sardar Awais Ahmad Khan Leghari, the Task Force received steadfast support from Finance and Revenue Minister Senator Muhammad Aurangzeb, Advisor to PM on Privatisation Muhammad Ali, National Coordinator Lt. General Muhammad Zafar Iqbal, SBP Governor Jameel Ahmed, Finance Secretary Imdadullah Bosal, and Task Force members, bolstered by the PBA and 18 banks.

The agreement entails restructuring Rs 660 billion in existing loans and providing Rs 565 billion in fresh financing to settle overdue payments to power producers. Crucially, consumers face no new costs, as repayments will be serviced through the existing Rs 3.23 per unit surcharge.

The structure also frees up Rs 660 billion in sovereign guarantees, redirecting liquidity to critical sectors like agriculture, SMEs, housing, education, and healthcare.

Finance Minister Senator Muhammad Aurangzeb emphasized that this resolution marks a bold step toward fiscal discipline, investor confidence, and energy sector sustainability. He described it as a testament to collective leadership, technical excellence, inter-institutional coordination, and public-private collaboration, setting a precedent for addressing Pakistan’s structural challenges with innovation and resolve.

The Minister further highlighted the government’s unwavering commitment to resolving longstanding energy bottlenecks while balancing financial stability with energy sector reforms.