Key Takeaways
- K-Electric’s unpaid bills caused a Rs. 34 billion increase in Pakistan’s circular debt.
- The circular debt now stands at Rs. 1.675 trillion as of June 2026.
- A case for recovery of the outstanding amount is pending in court.
The Power Division has identified K-Electric as the primary cause of a significant increase in Pakistan’s circular debt, which has risen by Rs. 34 billion to reach Rs. 1.675 trillion by June 2026.
According to figures presented in the National Assembly, the circular debt was Rs. 1.641 trillion at the end of June 2025, indicating a substantial rise in the last year.
The Power Division attributes the increase to K-Electric’s unpaid electricity bills, highlighting the company’s role in exacerbating the financial burden on the power sector.
A case has been filed in court to recover the outstanding amount, which underscores the seriousness of the issue and the government’s efforts to address it.
In an attempt to control circular debt and reduce outstanding liabilities, the government has introduced a hybrid take-and-pay model for independent power producers (IPPs).
This model aims to provide a more sustainable financial framework for the power sector, although its effectiveness remains to be seen.
The circular debt issue has been a persistent challenge for Pakistan’s power sector, affecting the reliability and efficiency of electricity supply across the country.
The government’s focus on K-Electric and the introduction of the hybrid model reflect a concerted effort to tackle the underlying issues and improve the financial health of the sector.
