MoF hails power sector circular debt restructuring worth Rs 1.225 trillion

ISLAMABAD: The Ministry of Finance (MoF) has welcomed the successful resolution of Rs. 1,225 billion power sector circular debt, achieved through a historic joint effort 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.
This achievement reflects the strength of teamwork across institutions united to address one of the most chronic challenges of Pakistan’s energy sector. The effort was led by the PM’s Task Force Chaired by the Minister of Power, Sardar Awais Ahmad Khan Leghari, firmly supported by the Minister of Finance and Revenue, Senator Muhammad Aurangzeb, Advisor to PM on Privatisation, Mr. Muhammad Ali (previously SAPM on Power), National Coordinator, Lt. General Muhammad Zafar Iqbal, Governor State Bank of Pakistan, Mr. Jameel Ahmed, Secretary Finance, Mr. Imdadullah Bosal and all the dedicated members of the Task Force, with the strong support of PBA and 18 Banks.
This landmark restructuring was achieved through strong collaboration, where the Task Force and Government Institutions provided policy leadership and execution, while the banking sector through PBA, actively supported by the SBP, anchored and mobilized financing with confidence in the energy sector’s future.
The agreement includes the restructuring of Rs. 660 billion in existing loans and Rs. 565 billion 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 Rs. 3.23 per unit. The structure also unlocks Rs. 660 billion in sovereign guarantees, channeling liquidity toward agriculture, SMEs, housing, education, and healthcare.
Commenting on this achievement, Federal Minister for Finance and Revenue Senator Muhammad 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 emphasized 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. Importantly, the release of Rs. 660 billion in sovereign guarantees through this arrangement will channel much-needed liquidity into priority sectors such as agriculture, SMEs, housing, education, and healthcare.