Islamabad: Pakistan’s power sector circular debt decreased significantly year-over-year, dropping 29% to PkR1.66 trillion in July 2025 from PkR2.35 trillion in the same period last year. This substantial reduction stems primarily from a 42% year-over-year decline in payments owed to power producers and a 13% decrease in payments from generation companies (GENCOs) to fuel suppliers.

However, the circular debt saw a slight uptick of PkR47 billion month-over-month, primarily due to reduced Prior Year Recoveries (PYA). This reduction in PYA is attributed to higher consumer bills in July 2025, lessening the need for adjustments.

Performance among distribution companies (DISCOs) also showed improvement. Loss inefficiency and under-recovery levels decreased by 36% and 45%, respectively, in July 2025 compared to the same month last year.