The Power Division on Monday described reports of a Rs223 billion increase in the power sector’s circular debt during the first five months of the current fiscal year as misleading.
A spokesperson for the division said comparing November 2025 circular debt with June 2025 figures was incorrect. “The proper comparison should be with the same period last year, July to November 2024,” the spokesperson explained.
The official clarified that the agreements signed with banks were aimed at refinancing expensive PLP loans and had no direct impact on circular debt flows. Seasonal factors contributed to increases observed between July and November 2024.
The Power Division said that by December 2025, circular debt flows had decreased significantly. The net increase in circular debt from July to December 2025 was below Rs80 billion. Improvements in DISCOs’ performance and the elimination of late payments contributed to the reduction.
During the fiscal year 2024–25, circular debt had declined to Rs1.614 trillion by June 2025, with losses reduced by Rs193 billion. Between July and December 2025, an additional Rs49 billion in losses was mitigated through better operational efficiency.
The spokesperson said that by the end of the current fiscal year, circular debt would be fully under control. Under the six-year Rs1.225 trillion Circular Debt Settlement Plan, the government aims to clear the sector’s accumulated liabilities systematically..
