The federal government has successfully cut Pakistan’s power sector circular debt by Rs. 780 billion, bringing it down to Rs. 1.614 trillion, as revealed during a NEPRA hearing on Q4 tariff adjustments for FY2024–25.

Key Drivers Behind the Reduction:

• Lower transmission line losses
• Increased bill recoveries
• Renegotiated Independent Power Producer (IPP) contracts
• Improved performance by DISCOs, saving Rs. 200 billion

Bank Loans & Borrowing Strategy:
Despite progress, the government plans to raise Rs. 1.275 trillion in fresh bank loans to further reduce the remaining debt — a move critics say may offer only short-term relief.

Consumer Relief Expected:
NEPRA announced consumers may receive a Rs. 1.8 per unit refund, totaling Rs. 53.393 billion, including K-Electric users. The relief comes from:

• Rs. 53.7 billion drop in capacity payments
• Rs. 662 million in transmission gains
• Offset by Rs. 182 million in maintenance costs and Rs. 804 million in system fees

Mixed Signals from Industry:
While official data showed a 49% surge in industrial consumption, many businesses report shutdowns. The rise is partly due to industries switching from captive generation to DISCOs, despite outages at facilities like Neelum-Jhelum.

Industrial Concerns:
Industrialists cautioned that the debt reduction is largely borrowed relief, urging long-term structural reforms.