Circular Debt: Are We Measuring the Right Problem?

Mettis Global published a column by economic analyst Shahid Anwar arguing that Pakistan's power-sector circular debt should be judged by its annual flow, not just its closing stock. The closing stock stood at Rs1.675 trillion at June 2026, up Rs61 billion from a year earlier. According to the writer, gross additions during FY2025-26 reached Rs609 billion, while the reported flow after reductions came to about Rs364 billion.

The writer argues that the Rs61 billion net rise conceals a larger pipeline of pressure, since payments and adjustments offset much of the new liabilities. Power Division figures cited in the column put DISCO operational inefficiencies at around Rs262 billion and weak recoveries at about Rs64 billion. K-Electric's non-payment was around Rs194 billion, and the combined power and gas circular debt was approximately Rs5.286 trillion by June 2026.

The column proposes monthly publication of opening stock, gross additions, reductions, payments and closing stock, plus quarterly targets for cutting new arrears. The piece warns that settling old debt does not stop new liabilities from forming while distribution losses and institutional non-payment continue. For PSX investors, the piece frames K-Electric's non-payment as one of the flows behind the sector's arrears rather than only an accounting matter.