ISLAMABAD: The Ministry of Finance has announced the successful resolution of Rs1,225 billion power sector circular debt. The achievement was made possible through a joint effort of the Prime Minister’s Task Force on Power, the Ministry of Energy, the State Bank of Pakistan, the Pakistan Banks Association (PBA), and 18 commercial banks.
According to the official statement issued on Thursday, this breakthrough is a significant step toward fixing one of Pakistan’s most persistent challenges in the energy sector. The move reflects strong coordination between government institutions and the financial sector.
The initiative was led by the Minister of Power, Sardar Awais Ahmad Khan Leghari, with support from Finance Minister Senator Muhammad Aurangzeb, Advisor to the Prime Minister on Privatisation Muhammad Ali, National Coordinator Lt. General Muhammad Zafar Iqbal, and Governor State Bank Jameel Ahmed. The Secretary Finance, Imdadullah Bosal, along with members of the task force, also played a central role.
The agreement covers the restructuring of Rs660 billion in existing loans and an additional Rs565 billion in fresh financing. These funds will help clear overdue payments to power producers. Importantly, the plan does not add any new burden on consumers. Repayments will be covered by the already applied surcharge of Rs3.23 per unit.
This structure also releases Rs660 billion in sovereign guarantees, freeing up liquidity for other critical sectors such as agriculture, small and medium enterprises, housing, education, and healthcare.
Finance Minister Aurangzeb said the resolution of circular debt is a decisive step in restoring fiscal discipline and boosting investor confidence in the power sector. He highlighted that the achievement demonstrates the value of teamwork, technical expertise, and public-private cooperation.
He added that this milestone reflects the government’s determination to tackle structural issues with innovation and unity. By addressing long-standing energy bottlenecks, Pakistan is moving toward financial stability while ensuring sustainable reforms in the power sector.
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