Saira Imran The government has signed a historic deal to resolve the power sector circular debt of Rs 1,225 billion. This agreement marks a major step toward stabilizing Pakistan’s financial system and improving the struggling energy sector.
The Prime Minister’s Task Force finalized the deal, while the Finance Ministry announced it. 18 commercial banks, the State Bank and the Pakistan Banks Association (PBA) played key roles in making this agreement possible.”
Restructuring Old Loans and Fresh Financing
Under the agreement, the government will restructure Rs 660 billion worth of old loans. At the same time, it will provide Rs 565 billion in new financing to power generation companies.This financing will help these companies clear their outstanding dues and improve their operations.
By restructuring past debts and providing new support, the government aims to ease pressure on the power sector, which has long struggled with inefficiencies and rising liabilities.
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No Extra Burden on Consumers
The Finance Ministry assured the public that this deal will not place any new burden on electricity consumers. Government will continue payments through the existing surcharge of Rs 3.23 per unit, which it already collects.
People have welcomed this step because it balances financial reform without adding more stress to households and businesses already coping with high energy costs.
Unlocking New Investment Opportunities
Another important feature of the agreement is that it will unlock sovereign guarantees worth Rs 660 billion. This will create fresh opportunities for investment in key sectors including:
- Agriculture
- Small and Medium Enterprises (SMEs)
- Housing
- Education
- Health
By creating space for investment, the government hopes to encourage economic activity and job creation in areas that directly impact citizens’ lives.
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Finance Minister’s Statement
Finance Minister Muhammad Aurangzeb called the deal a decisive step for financial discipline, energy reforms, and investor confidence.
He said the agreement represents collective leadership, technical expertise, and public-private cooperation. He also highlighted that addressing long-standing issues in the energy sector is a major success for the government.
“The government is committed to ensuring reforms in the energy sector,” Aurangzeb added, “and this agreement shows that progress is possible when institutions work together.”
Stability and Growth Ahead
According to the Finance Ministry, this historic deal will not only bring stability to the energy sector but also open a new chapter for Pakistan’s economy.
The government expects the agreement to promote:
- Sustainable economic growth
- Stability in the power sector
- Greater investor trust
- Improved financial discipline
In the long run, these steps are expected to help Pakistan reduce its dependence on costly borrowing, strengthen its financial system, and provide a foundation for stable development.
A Step Toward Lasting Reform
The power sector circular debt has long been a challenge for Pakistan. It has burdened the energy system, reduced efficiency, and discouraged investors. This agreement is seen as a breakthrough because it combines debt restructuring, fresh financing, and future investment opportunities.
If implemented successfully, the deal could not only ease the power sector’s troubles but also restore confidence in Pakistan’s economic future.
