The power sector circular debt in Pakistan has reached Rs2,306 billion. 

According to sources, the Power Division submitted its report on the power sector circular debt to the Power Committee of the Cabinet on Thursday. According to the report, the circular debt increased by Rs155 billion in the first five months of the ongoing fiscal year and Rs515 billion in the last one year. The total circular debt stood at Rs2,150 billion until June 30, 2020. 

The report says that an increase of Rs8 billion in the circular debt was caused by the losses resulting from incompetence of the power distribution companies. Under recovery in Azad Kashmir contributed Rs16 billion to the total circular debt and non-payment of subsidies added Rs65 to the total circular debt in the first five months of the ongoing financial year. Interest on IPPs added Rs34 billion, while the interest rate on PHPL added Rs33 billion to the total circular debt in five months. 

Delay in recovery of the cost of power production added Rs103 billion to the circular debt in five months, while non-payment of dues by K-Electric consumers caused an increase of Rs34 billion. An increase of Rs1158 billion in the power sector circular debt has been seen in the first 2.3 years of the incumbent PTI government. In August 2018, the total power sector debt stood at Rs1,148 billion.