The Power Ministry on Tuesday announced that its energy sector reforms have reduced the circular debt by Rs. 779 billion, or nearly 33 percent, from Rs. 2.393 trillion in FY2023-24 to Rs. 1.614 trillion in FY2024-25.
The ministry also reported a sharp decline in distribution losses as energy sector reforms continued to deliver results.
The Power Division spokesperson said the federal budget had allocated Rs. 893 billion for the power sector in FY2025-26, but Rs. 98 billion was later cut from the allocation. Had the full amount been released, circular debt would have declined further to Rs. 1.577 trillion.
Instead, the reduction in budgetary support led to a Rs. 61 billion increase in circular debt during the fiscal year, the spokesperson said, adding that the increase was driven by funding constraints.
The spokesperson mentioned improvement in the financial performance of power distribution companies (DISCOs). Their losses fell from Rs. 591 billion in FY2023-24 to Rs. 397 billion in FY2024-25, a reduction of Rs. 193 billion.
During FY2025-26, DISCO losses declined by another Rs. 71 billion to Rs. 326 billion, bringing the cumulative reduction over two years to Rs. 265 billion, or nearly 45 percent.
According to the Power Division, the sustained decline in both circular debt and distribution losses reflects the positive impact of its reforms. It said efforts to strengthen the power sector and improve service for consumers will continue.
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