Power sector circular debt stood at Rs1.7tr in June 2026

Mettis Global reported that the power sector's circular debt stood at Rs1.68tr as of June 2026, up slightly from Rs1.6tr in June 2025. The circular debt balance grew by Rs61bn during FY26, a sharp reversal from the Rs780bn decline recorded a year earlier. The figures were compiled from Ministry of Energy (Power) data and research by Arif Habib Limited.

DISCO underperformance of around Rs326bn was the largest driver, against Rs397bn a year earlier, while non-payment by K-Electric added Rs194bn compared with Rs4bn previously. DISCO under-recoveries narrowed to Rs64bn from Rs132bn. Payments to power producers totalled Rs302bn, the only offsetting item, down 62 per cent from Rs801bn a year earlier.

In December 2025 the government introduced a circular debt financing line of Rs694bn and moved Rs660bn previously held in Power Holding Limited onto it as bank financing. Rs129bn of that facility had been repaid by June 2026. The amount held in Power Holding Limited was to be refinanced at KIBOR minus 0.9 per cent.