The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has disputed the Power Division’s latest circular debt report, arguing that the figures reflect accounting adjustments rather than any real improvement in the efficiency or financial health of the power sector.
Read More: Power sector circular debt edges up despite payments
In an analysis shared with the National Electric Power Regulatory Authority (Nepra) and leading business organisations on Wednesday, the apex trade body said the reported containment of circular debt growth was largely achieved through technical reclassifications and fiscal injections, instead of structural reforms or improved cash flows.
The FPCCI alleged that significant financial liabilities were being parked outside balance sheets, particularly in relation to growing payables of K-Electric, while taxpayer-funded fiscal injections were being used to artificially slow the reported growth of circular debt. It maintained that these measures did not address the core issue of heavy cross-subsidies imposed on the industrial sector.
According to the analysis, net circular debt increased by Rs75 billion during July–December 2025, compared to an increase of Rs79bn during July–September 2025, suggesting little improvement in underlying financial performance. The FPCCI noted that the government injected Rs224bn through fiscal space during the first half of the fiscal year, which significantly reduced the reported increase in circular debt.
It added that these funds, along with Rs801bn injected in FY25, could have been partly used to eliminate cross-subsidies from industrial tariffs, with the remaining amount applied directly to reduce circular debt. Without such injections, the trade body argued, circular debt would have risen sharply, underscoring that the system remained operationally cash-negative.
The FPCCI also pointed to the reclassification of liabilities from “amount parked in PHL” to “circular debt financing” as a key accounting change that altered presentation but did not reduce total obligations.
Read More: Power Division denies Rs 224 billion circular debt spike reports
The trade body stressed that meaningful reduction in circular debt would require improvements in recoveries, cost control, and tariff rationalisation rather than reliance on fiscal support and accounting measures.