The Finance ministry has welcomed the successful settlement of the Rs1,225 billion circular debt in the power sector. The restructuring was achieved through joint efforts of the Prime Minister’s Task Force on Power, the Ministry of Energy, the State Bank of Pakistan, the Pakistan Banks Association, and 18 partner banks.
The Finance ministry termed the development a landmark achievement and a major step toward addressing one of Pakistan’s most pressing energy challenges. The effort was led by Power Minister Sardar Awais Ahmad Khan Leghari, supported by Finance Minister Senator Muhammad Aurangzeb, and other senior officials. The banking sector, guided by the Pakistan Banks Association and supported by the State Bank, played a central role in mobilizing financing.
The agreement covers the restructuring of Rs660 billion in existing loans and Rs565 billion in new financing. These funds will be used to clear overdue payments to power producers. Importantly, no additional burden will be placed on consumers. Repayments will be made through the existing surcharge of Rs3.23 per unit.
According to the Finance ministry, the resolution also releases Rs660 billion in sovereign guarantees. This will free up liquidity for other critical sectors, including agriculture, small and medium enterprises, housing, education, and healthcare.
Finance Minister Muhammad Aurangzeb said the breakthrough reflects effective teamwork, technical expertise, and public-private collaboration. He added that the milestone strengthens fiscal discipline, investor confidence, and energy sector stability.
The Finance ministry further highlighted that this restructuring sets a strong precedent for addressing Pakistan’s structural challenges through innovation and unity. It also demonstrates the government’s commitment to balancing financial stability with much-needed reforms in the power sector.
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