The Pakistan Industrial and Traders Association Front (PIAF) has welcomed the government’s landmark Rs1.225 trillion financing arrangement with a consortium of 18 banks. The move aims to retire circular debt and clear dues of independent power producers (IPPs), which have weighed heavily on the economy.
PIAF Chairman Faheemur Rehman Saigol said the financing arrangement reflects strong resolve to address one of Pakistan’s most pressing challenges. He noted that the circular debt issue has undermined investment, growth, and fiscal stability for years.
In a joint statement, Saigol, Senior Vice Chairman Nasrullah Mughal, and Vice Chairman Tahir Manzoor Chaudhary praised the government’s decision to restructure the debt on favorable terms. They said the repayment plan, supported through a dedicated surcharge, will provide much-needed stability in the power sector.
The loan, finalised with 18 banks at Kibor minus nine percent, is expected to ease financial pressures. According to officials, circular debt has already been reduced from Rs2.4 trillion to Rs1.64 trillion through negotiations with IPPs and cost-cutting measures. The surcharge of Rs3.23 per unit is planned to end within six years instead of the previously estimated eight to ten years.
PIAF, however, cautioned that the financing arrangement alone cannot ensure lasting stability. The association stressed the need for deep reforms, including reducing losses, improving recoveries, and addressing theft and billing inefficiencies. “Borrowing clears old dues, but new arrears must not re-emerge,” the leaders warned.
The group also urged authorities to strengthen distribution company boards, adopt technology for monitoring, and pass efficiency savings on to consumers. They emphasized that lowering energy costs is vital for industry competitiveness and job creation.
PIAF welcomed the inclusion of the circular debt plan in the International Monetary Fund’s programme targets. It said the financing arrangement could boost investor confidence and attract fresh capital if reforms continue.
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