The dues of Independent Power Producers (IPPs) continue rising and have accumulated Rs 1.06 trillion amid circular debt.

The Ministry of Energy Power Division briefed the Economic Coordination Committee that the government of Pakistan is consistently working ot address the multifaceted challenges confronting the country’s power sector.

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Sources told Newztodays that a key concern remains the persistent accumulation of the circular debt, which stood at Rs 1,817 billion at the end of October 2025.

Payments to independent power producers (IPPs) have reached Rs 1, 069 billion as of October 2025, a level that is increasingly unsustainable as IPPs face mounting pressure in meeting their debt obligations asd maintaining their fuel supply chains.

This was informed to economic coordination committee (ECC) in a recent meeting.

The Ministry of Energy (Power Division) informed the forum that, as per projected invoices from power producers, estimated recoveries from DISCOs, and Tariff Differential Subsidy (TDS) for November and December 2025, the circular debt stock is projected to reach Rs 2,105 billion by the end of December 2025.

Further, payments to power producers must be made in a timely manner, as delays would further constrain electricity availability and adversely impact economic growth. Additionally, since payments to power producers are secured through sovereign guarantees issued by the Government of Pakistan (GoP), delays increase the likelihood of guarantees being called and the imposition of late payment surcharges.

It is also pertinent to note that a significant portion of power sector subsidies is typically released in this quarter of the fiscal year, which creates substantial financial strain. Earlier disbursement of these subsidies would not only reduce financial costs but also support the achievement of circular debt flow targets. Accordingly, there is a crucial requirement for immediate cash flow injections to stabilize liquidity in the power sector.

The Ministry of Energy (Power Division) apprised the forum that the summary was circulated to the Finance Division for views and comments. The Finance Division agreed with the proposal for a Technical Supplementary Grant (TSG) amounting to Rs 175 billion from Finance Division Demand No. 47, and the remaining amount of Rs 95 billion to be released from the existing allocation of the Power Division.

To meet the cash flow constraints of the sector, and considering the above, approval was sought for the Government of Pakistan’s investment in DISCOs. Accordingly, approval was requested for a Technical Supplementary Grant (TSG) of Rs 105 billion from Finance Division Demand No. 47 to Power Division Demand No. 35, and also to allow the Power Division to release Rs 95 billion from its allocated budget under Demand No. 35 to CPPA-G under the head of Government of Pakistan investment in DISCOs’ equity.

The Ministry of Energy (Power Division) solicited the approval of the ECC of the Cabinet for the proposal.