The federal government has planned to resolve its long-standing legal dispute with K-Electric as part of broader reforms aimed at reducing Pakistan’s mounting circular debt in the power sector, 24NewsHD TV reported on Sunday.
According to official details shared with the International Monetary Fund (IMF), the government intends to settle the dispute with K-Electric by September this year, while arrangements with all Independent Power Producers (IPPs) are expected to be finalised by June 2026.
The government told the IMF that agreements with several IPPs had already been completed as part of a wider operation to reduce the country’s circular debt burden.
Officials said delays caused by the unresolved dispute with K-Electric had resulted in blocked payments and growing arrears, further contributing to the circular debt problem.
The government expected the planned measures to reduce the annual flow of circular debt by up to Rs300 billion.
For the next fiscal year, authorities are likely to set the total circular debt flow target at Rs300 billion.
Pakistan also informed the IMF that while progress had been made, the overall operation to control and reduce circular debt remained incomplete, allowing liabilities to continue increasing.
Reporter: Waqas Azeem