Pakistan Readies Electricity Tariff Hikes
Pakistan may soon impose higher electricity tariffs as the government finalises a plan intended to eliminate the power sector’s rising circular debt.
As per the media reports, the Circular Debt Management Plan 2025–26, which outlines sweeping measures aimed at putting the power sector back on track.
The document warns that circular debt, which stood at Rs1,614 billion in the last fiscal year, is now expected to climb to Rs2,348 billion.
Officials attributed the Rs734 billion increase primarily to low recoveries and rising production costs, which the plan identifies as the debt’s core drivers.
Sources say the government has assured the IMF that upcoming electricity tariff hikes are essential steps to stop the continuous buildup of circular debt.
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The plan sets a national mission to bring the power sector’s circular debt flow down to zero, restoring financial stability and reducing reliance on subsidies.
To curb production costs, the document states that expensive power plants will be shut down while prioritising cheaper generation sources where possible.
It also instructs power distribution companies to reduce technical and commercial losses by improving efficiency and tightening operations to shore up revenues.
The plan mandates timely recovery of arrears from K-Electric and gencos, aiming specifically to plug long-standing revenue leakages across the sector significantly.
