By Ali Imran
ISLAMABAD:: The World Bank has expressed reservations in a statement as circular debt of Pakistan’s power sector keeps surging.
“Despite steep hike in power tariffs in the country, the circular debt of the power sector still increasing,” WB stated.
Circular debt of Pakistan’s power sector rapidly soared during the period of fiscal years from 2019 to 2021, while during the FY 2022 to 2024 the debt keeping increased but with relatively slower speed.
The power sector’s circular debt increased by 1128 billion rupees during years 2019 to 2021, while it enhanced by 113 billion rupees from 2022 to 2024 years. Total volume of the power sector’s debt was Rs 2393 billion in fiscal year 2024, which was more than double than 1152 billion rupees in year 2018. Power sector’s circular debt increased to 1619 billion in 2019 and 2150 billion in Year 2020.
The debt was 2280 billion in 2021 and 2253 billion rupees in 2022 year. The volume of the country’s circular debt soared to 2310 billion in FY 2023.
The IMF, Pakistan authorities shared the plan of additional 100 billion rupees increase int eh circular debt in the power sector during the current fiscal year.
Sources indicate that by June 2025, the circular debt in the power sector is expected to surpass Rs 2,550 billion.
Meanwhile, Pakistan has assured the IMF of timely tariff adjustments to manage the circular debt. The IMF has demanded that the circular debt in the power sector should not exceed 2,500 billion rupees.
However, sources reveal that even during the last fiscal year, the shared plan with the IMF to control the debt was not successfully implemented. According to IMF conditions, the circular debt was supposed to be controlled at 2,310 billion rupees for the current fiscal year. If this condition is not met, it could lead to a violation of the loan agreement.
