Pakistan’s power circular debt declined to Rs1.614 trillion at the end of fiscal year 2024-25, down from Rs2.393 trillion a year earlier, according to the latest report by the Auditor General. The report recorded a total reduction of Rs779.58 billion, reflecting a notable improvement in the sector’s financial position.
Government Support Played a Key Role
The audit reviewed government expenditures exceeding Rs985.8 billion across 74 organizations operating under the Ministry of Energy (Power Division) and the National Electric Power Regulatory Authority (NEPRA). However, the report noted that the reduction in circular debt was not primarily driven by structural reforms or operational efficiency. Instead, it was largely achieved through off-budget government financial support and commercial borrowing.
DISCOs Still Struggle With High Losses
Despite the decline in circular debt, the performance of Pakistan’s electricity distribution companies (DISCOs) remains a major concern. During FY2024-25, actual transmission and distribution losses stood at 17.55%, indicating that significant operational inefficiencies continue to affect the power sector.
Long-Term Reforms Remain Essential
Energy experts believe that financial injections alone cannot provide a lasting solution to Pakistan’s power sector challenges. Sustainable improvement will require reducing electricity theft, improving bill recovery, modernizing transmission and distribution infrastructure, and strengthening the operational performance of DISCOs.
Sustainable Energy Sector Requires Structural Changes
The Auditor General’s findings suggest that while government intervention has temporarily eased financial pressure, comprehensive reforms remain essential for long-term stability. Strengthening governance, improving financial discipline, and increasing operational efficiency will be critical to preventing the circular debt from rising again and ensuring a more resilient power sector in the years ahead.
