Pakistan’s power-sector circular debt increased by Rs. 34 billion during fiscal year 2025-26, reaching Rs. 1.675 trillion by June 30, 2026, with the Power Division attributing the rise to unpaid dues from K-Electric.

Details presented in the National Assembly show that electricity-sector circular debt stood at Rs. 1.641 trillion at the end of June 2025 before increasing over the following year.

According to the Power Division, the increase was linked to non-payment for electricity supplied to K-Electric from the national grid. A case seeking recovery of the outstanding dues is pending in court.

The government has also introduced a hybrid take-and-pay model for independent power producers (IPPs), replacing existing take-and-pay arrangements, as part of efforts to reduce circular debt.

The figures highlight continued financial pressure on Pakistan’s power sector despite government measures aimed at controlling outstanding obligations.

The Power Division’s explanation regarding K-Electric reflects the government’s stated position on the increase. The outstanding amount specifically attributable to K-Electric was not provided in the reported figures.