The circular debt of the energy sector in Pakistan will reduce to around PKR 1.1 trillion at the end of the financial year 2023, as compared to the current level of PKR 2.5 billion.

As per the reports, the government is taking steps not only to stop the increase in Circular Debt but also to reduce it with time. In this regard, the Government has resorted to repeated Electricity rate hikes, Phase-out of some old independent power plants (IPPs), fuel changes to efficient fuel, tax rationalizations, and timely payment of subsidies which is expected to contain the circular debt level over the next two years.

A combination of ambitious measures for next two years will keep Circular debt growth in the range of PKR 2trillio. The average Electricity Tariff is expected to increase to PKR 20.25 per unit for FY2023, which is currently PKR 15.4 per unit.

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