Pakistan power sector circular debt rises as budget cuts offset reforms

Pakistan’s power sector circular debt grew by Rs61 billion in fiscal year 2025‑26 after the government cut budgetary support by Rs98 billion, preventing a further decline that would have reduced the debt to Rs1.577 trillion. The Power Division noted that, despite the increase, sector reforms continued to improve financial indicators, with DISCO losses falling to Rs326 billion in 2025‑26 from Rs397 billion the previous year.

Prime Minister Muhammad Shehbaz Sharif ordered a comprehensive technical audit of power distribution companies’ billing systems and stressed the need for nationwide smart‑meter installation, solarisation projects in villages, and stricter anti‑theft measures. He announced performance incentives for the best‑performing DISCOs and highlighted that several electric supply companies achieved 100 percent recoveries in the latest fiscal year.