The Power Division has shared its plan with the National Assembly to tackle the massive Rs2.42 trillion circular debt in the energy sector. Minister Awais Leghari confirmed the strategy is part of the Circular Debt Management Plan, backed by the Ministry of Energy, Ministry of Finance, and a task force. He added that Rs1.2 trillion will be raised to refinance existing debt through a loan with a six-year term and KIBOR minus 0.9% interest.
This loan will be repaid through a debt surcharge collected from electricity users. Meanwhile, savings from renegotiated IPPs contracts will be distributed over time, with a portion easing the debt and the rest benefitting consumers. Leghari stressed that managing the circular debt is vital for restoring financial discipline in the power sector.
However, it remains unclear if electricity tariffs for distribution companies (Discos) will increase or decrease from July 1, 2025, as the final cost components are still under review by NEPRA. Eight Discos, including HESCO, GEPCO, and PESCO, have submitted multi-year tariff petitions covering FY2025-26 to FY2029-30. Together, they seek over Rs455.6 billion to cover expenses like salaries, depreciation, and operational costs.
Industry representatives raised concerns over the possible impact on energy costs. The textile sector warned that export orders are already fixed based on current rates. In response, FBR Chairman Rashid Mahmood Langrial said tariff decisions would be finalized only after NEPRA sets new margins. Business leaders from KCCI demanded an audit of Disco performance due to rising losses and inefficiencies.
Despite the uncertainty, the Power Division reaffirmed its commitment to working with NEPRA. It aims to balance financial recovery with consumer relief. The goal remains to improve Disco efficiency, reduce losses, and ease the burden on industries and households across the country.