Islamabad: Spokesperson of Power reference to the news item published in a section of media , which reports that the Circular Debt (CD) flow increased by Rs. 224 billion during the period from Jul-Nov 25, despite the bank refinancing agreement signed in Sep-25, declared it as misleading, devoid of factual data linking, upto date data and without seeking Power Division version.
Spokesperson said that, It is imperative to note that the Circular Debt Stock on June 30th 2025 can not be compared with its stock at the end of November 2025 that is only five months. Furthermore the story totally on a wrong footing attributed and connected the Circular Debt variation with Banks Agreement which was primarily meant for PHPL expensive debt replacement with much cheaper loan and that too with a five to six years plan to repay the loan itself.
Ideally the July to November 2025 period could have been compared with July to November 2024. It has created misunderstanding.
It is important to highlight that the said July to November 2024 increase is primarily attributable to seasonal factors that influence monthly Circular Debt movements and are typically reversed by the end of the fiscal year.
It is very important to note that the Circular Debt flow declined in Dec 25, resulting in a net CD flow of less than Rs. 80 billion for the period from Jul-Dec 25.
The news acknowledged that circular debt declined significantly during FY 2024-25 to Rs. 1,614 billion as of June 2025. This reduction was achieved through improvements in DISCOs’ operational efficiencies, strengthening of macroeconomic variables, and the waiver of late payment interest following successful negotiations with Independent Power Producers (IPPs).
It is expected that by the close of the current fiscal year, the Circular Debt position will be fully contained, with no net addition to the overall stock. This expectation is consistent with historical trends, wherein seasonal fluctuations typically normalize in the latter part of the fiscal year.
Furthermore, it is emphasized that these seasonal variations in Circular Debt flow have no implications for consumer-end electricity tariffs and therefore do not impact end-user pricing.
It is also pertinent to highlight that DISCOs’ inefficiencies during FY 2024-25, as compared to FY 2023-24, were reduced by Rs. 193 billion. Similarly, inefficiencies during Jul-Dec 25 further declined by Rs. 49 billion compared to the corresponding period of Jul-Dec 24.
These improvements underscore the Government’s continued commitment to enhancing operational efficiency and maintaining financial discipline in the power sector.
Additionally, it is pertinent to mention that the Rs. 1,225 billion Circular Debt Settlement Plan is to be implemented over a six-year period wherein existing CD stock shall be refinanced at favourable terms. Till date the first tranche of the settlement has been received. The stock shall be eliminated in next six years along with discontinuation of Debt Service Surcharge.
Sohail Majeed is a Special Correspondent at The Diplomatic Insight. He has twelve plus years of experience in journalism & reporting. He covers International Affairs, Diplomacy, UN, Sports, Climate Change, Economy, Technology, and Health.
