Pakistan’s Power and Gas Circular Debt Crosses Rs. 5.3 Trillion

Pakistan’s combined circular debt in the power and gas sectors has crossed Rs. 5.3 trillion, highlighting the financial challenges facing the country’s energy industry. Figures presented before the National Assembly show that the combined outstanding amount reached Rs. 5,306 billion by June 30, 2026.

The power sector’s circular debt stood at Rs. 1,675 billion, while the gas sector’s debt climbed to Rs. 3,631 billion. The figures indicate that the gas sector accounts for the larger share of the accumulated liabilities.

The growing debt burden remains a major concern for Pakistan’s energy system, where delayed payments and outstanding dues can put pressure on utilities, suppliers, and the wider energy supply chain.

Pakistan’s Combined Circular Debt Reaches Rs. 5.306 Trillion

According to figures presented to the National Assembly, the combined circular debt of the two sectors reached Rs. 5.306 trillion at the end of June 2026.

The figures reflect the accumulated financial liabilities reported for the two sectors. Circular debt is different from Pakistan’s total public debt, as it relates specifically to payment and financial imbalances within the energy supply chain.

Power Sector Circular Debt Increases by Rs. 34 Billion

Pakistan’s power sector circular debt reached Rs. 1,675 billion by June 30, 2026, compared with Rs. 1,641 billion at the end of the previous fiscal year.

This represents an increase of Rs. 34 billion over the year.

The Power Division attributed the increase mainly to outstanding payments for electricity supplied from the national grid to K-Electric. Officials informed the National Assembly that a case concerning the recovery of these dues remained pending in court.

The outstanding payments illustrate how unresolved financial obligations between organisations operating in the electricity sector can contribute to the accumulation of circular debt.

Government Changes Payment Arrangements With Power Producers

Officials also told the National Assembly that the government had ended its take-and-pay agreements with independent power producers (IPPs) and introduced a hybrid take-and-pay model.

Such contractual arrangements form part of the wider framework governing payments to power producers. Their impact on the sector’s financial position will depend on implementation, contractual terms, electricity demand, and the resolution of outstanding obligations.

The reported change is one of the measures being pursued as Pakistan attempts to address the persistent financial problems affecting the power sector.

Gas Sector Circular Debt Reaches Rs. 3.631 Trillion

The gas sector accounts for the larger portion of Pakistan’s combined energy circular debt.

According to figures presented by the Petroleum Division, gas sector circular debt increased from Rs. 3,288 billion on June 30, 2025, to Rs. 3,631 billion on June 30, 2026.

That represents a year-on-year increase of Rs. 343 billion, although officials and reports have also described the rise as approximately Rs. 344 billion.

The reported debt includes Rs. 1,783 billion in late-payment surcharges. These charges form a substantial component of the gas sector’s accumulated financial liabilities.

The figures highlight the scale of the financial pressure facing the gas supply chain. Addressing the problem requires attention to outstanding payments, surcharges, and the underlying financial arrangements between different participants in the sector.

Why Circular Debt Is a Problem for Pakistan’s Energy Sector

Circular debt develops when payments are delayed or remain unpaid as money moves through an interconnected supply chain.

In the power sector, financial pressure can involve electricity purchasers, distribution companies, power producers, fuel suppliers, and other entities. In the gas sector, payment difficulties can similarly affect the organisations involved in purchasing, transporting, and supplying gas.

When an organisation cannot recover money owed to it, it may struggle to meet its own financial obligations. Those delays can then affect other participants in the supply chain, allowing unpaid amounts to accumulate.

Circular debt is therefore not simply a single unpaid bill. It reflects a wider financial imbalance that can become more difficult to resolve as liabilities and associated charges grow.

Could Circular Debt Affect Electricity and Gas Consumers?

The accumulation of circular debt creates risks for the energy system, but it does not automatically mean that electricity or gas tariffs will rise by a specific amount.

The eventual impact on consumers depends on government policy, tariff determinations, subsidies, fuel costs, contractual obligations, and the measures adopted to address the financial shortfall.

Possible consequences of persistent financial problems include pressure on energy companies’ cash flows, greater difficulty meeting payments to suppliers, and the need for policy changes to improve cost recovery and financial management.

Consumers should distinguish between the reported circular debt figures and any separate announcement about electricity or gas prices. A tariff increase requires its own official notification or regulatory decision.

Government Faces Challenge of Controlling Energy Debt

The latest figures underline the difficulty of resolving Pakistan’s energy-sector financial problems.

Reducing circular debt sustainably requires more than changing payment arrangements. It also requires improved collection of outstanding bills, timely payments between organisations, stronger financial management, and measures that prevent new liabilities from accumulating.

In the power sector, the resolution of disputed dues and the effectiveness of revised arrangements with power producers will be important developments to watch.

For the gas sector, the scale of outstanding liabilities and late-payment surcharges highlights the need to understand the sources of the debt and how future payment obligations can be managed more effectively.

The effectiveness of these measures will ultimately depend on whether the sectors can limit new unpaid amounts while dealing with existing liabilities.

Pakistan’s Energy Debt Remains a Major Economic Concern

Pakistan’s combined power and gas circular debt of Rs. 5.306 trillion demonstrates the scale of the financial challenges facing the country’s energy system.

The gas sector accounts for Rs. 3.631 trillion of the total, while the power sector’s debt stands at Rs. 1.675 trillion. Both figures were reported for June 30, 2026.

The next important question is whether policy changes and improved financial management can slow the accumulation of new liabilities and resolve existing payment problems.

For consumers and businesses, progress on circular debt matters because a more financially stable energy sector is better positioned to manage its obligations and support reliable energy supply.

Editorial note: The amounts in this report are based on figures reported as having been presented before the National Assembly. Readers should consult official Power Division, Petroleum Division, and parliamentary records for the underlying statements and any subsequent revisions.