The federal government has resolved the long-standing circular debt crisis in the power sector through joint efforts of the Prime Minister’s Task Force and the Ministry of Finance, 24NewsHD TV channel reported on Thursday.
At the inauguration ceremony of the Circular Debt Resolution Plan in Islamabad, Prime Minister Shehbaz Sharif and Finance Minister Muhammad Aurangzeb addressed the event virtually from New York.
Prime Minister Shehbaz Sharif described the elimination of circular debt as a monumental success, noting that negotiations with Independent Power Producers (IPPs) had been one of the toughest challenges.
“The circular debt was consuming all available resources. Tackling it is a major national achievement,” PM Shehbaz said.
Finance Minister Muhammad Aurangzeb emphasised that progress toward sustainability in the energy sector and fiscal discipline was a decisive milestone that would restore investor confidence in Pakistan’s economy.
Aurangzeb underscored that the resolution marks a decisive step toward restoring fiscal discipline, investor confidence, and energy sector sustainability.
Highlighting the broader significance of the achievement, the finance minister said this milestone is a testament to the power of collective leadership and effective teamwork, underpinned by technical excellence, inter-institutional coordination, and public-private collaboration.
He added that the success sets a precedent for addressing Pakistan's structural challenges with innovation, unity, and resolve.
He further emphasised that this accomplishment signals the government's unwavering commitment to resolving long-standing energy bottlenecks and the government's ability to balance financial stability with energy sector reforms.
According to the press release issued by the Finance Ministry, this historic joint effort was led by the Prime Minister’s Task Force on Power in coordination with the Ministry of Energy, the State Bank of Pakistan, the Pakistan Banks Association, and 18 partner banks.
This landmark restructuring represents a major breakthrough in addressing one of the most chronic challenges of Pakistan's energy sector.
The agreement includes the restructuring of 660 billion rupees in existing loans and 565 billion rupees in fresh financing to clear overdue payments to power producers. Importantly, this debt workout introduces no new burden on consumers, as repayments will be serviced through the already levied surcharge of 3.23 rupees per unit.
The structure also unlocks 660 billion rupees in sovereign guarantees, channeling liquidity toward agriculture, SMEs, housing, education, and healthcare.
Reporter: Waqas Azeem