Liabilities show gas sector at Rs3,442 billion, surpassing electricity’s Rs1,764 billion, highlighting deep financial stress in Pakistan’s energy system
By S.M. Inam
KARACHI: Pakistan’s energy sector circular debt rose to Rs5,206 billion, highlighting what officials and international lenders have long described as a persistent structural drag on the country’s fiscal and industrial stability, according to figures cited in a recent assessment linked to the International Monetary Fund.
The breakdown of the liabilities showed the gas sector carrying the larger share at Rs3,442 billion, while the electricity sector accounted for Rs1,764 billion. Together, the figures pointed to a financial burden that has continued to expand into early 2026, despite repeated rounds of policy intervention and tariff revisions aimed at slowing the pace of accumulation.
The IMF, in its latest review of Pakistan’s economic program, flagged the energy sector’s growing stock of unpaid obligations as one of the most persistent pressure points on the broader economy of Pakistan. The debt was not only described as a balance-sheet issue but also as a systemic constraint that continued to distort investment, pricing and cash flows across the energy supply chain.
Successive governments have been attempting to address the problem under ongoing reform commitments linked to the IMF-supported program. Measures have included frequent electricity tariff adjustments, the gradual removal of untargeted subsidies, and efforts to restructure outstanding liabilities across the power sector.
Authorities have also moved to convert portions of the accumulated debt into formal payables managed through entities such as the Central Power Purchasing Agency, in an attempt to improve transparency and repayment scheduling. Officials have further indicated plans to impose additional surcharges on electricity consumers to help service and gradually retire the principal stock of circular debt.
However, those steps have remained politically sensitive, particularly at a time when households and industry have already been grappling with rising electricity and gas tariffs, inflationary pressure and weaker purchasing power.
The latest figures underscored how circular debt continued to strain liquidity within the energy system. Power producers and gas suppliers have faced delayed payments, which in turn has affected fuel procurement, generation stability and investment confidence across the sector.
Taken together, the rising debt illustrated a cycle that policymakers have struggled to break: rising costs feeding into higher tariffs, limited revenue recovery, and continued accumulation of arrears. Despite repeated reform pledges, the energy sector’s financial model has remained under significant stress, with no immediate sign of structural relief.
