By Mehrab Shah Afridi
ISLAMABAD: The federal government announced on Wednesday that it had achieved a significant milestone in its long-running effort to reduce the power sector’s circular debt, completing payments totaling Rs659.6 billion under a planned settlement program.
The move was described by Energy Minister Owais Leghari as a “historic transaction” and a key component of the broader Rs1.225 trillion strategy to tackle the sector’s longstanding financial burden, which has weighed heavily on Pakistan’s economy for years.
Leghari explained that the authorities successfully redeemed Rs399.6 billion worth of Pakistan Energy Sukuk I and II, marking what he called the single largest debt-market transaction in the country’s history.
An additional Rs259.7 billion was settled across various syndicated financing facilities, easing pressure on state-owned energy companies and improving liquidity throughout the energy supply chain.
Officials said the settlement also strengthened Pakistan’s capital markets and restored investor confidence, particularly within the Islamic finance sector, which has increasingly become a key channel for government borrowing.
The minister underlined that structural reforms in the energy sector remained ongoing, with the aim of curbing losses, enhancing operational efficiency, and preventing the circular debt from accumulating to previous levels.
He said the latest settlement demonstrated that while reforms are challenging, they are producing tangible benefits for the power sector and the wider economy, ensuring more reliable energy delivery and fiscal stability.
Analysts noted that the government’s strategy, combining debt settlement with long-term structural reforms, could help stabilize energy pricing and reduce fiscal strain, while sending positive signals to domestic and international investors about Pakistan’s commitment to financial discipline and market confidence.
