ISLAMABAD: Power Division’s claim of around Rs800 billion reduction in power sector circular debt is “misleading, artificial and unsustainable”, stemming from fiscal injections rather than structural reforms, a new report by the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) observed.

The detailed analysis from the nation’s largest business body challenges a Power Division report that claimed circular debt (CD) would amount to Rs1.614 trillion by the end of June 2025, down from Rs2.393tr by end-June 2024, showing a reduction of Rs780bn.

“The reported reduction in CD for FY25 is primarily attributed to a one-time stock payment of Rs801bn rather than any sustained operational efficiency gains,” the FPCCI report stated, adding that this settlement was financed through fiscal measures, not through performance improvements in the power sector.

The FPCCI asserted that the funds used for the payment were originally designated for consumers, skewing the actual state of the power sector.

Says........

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