ISLAMABAD: Pakistan’s power minister announced on Wednesday the government has settled Rs 659.6 billion ($2.37 billion) in energy sector debt, calling it the largest-ever debt market transaction carried out in the country as Islamabad pushes ahead with reforms to curb mounting liabilities in its troubled power sector.
Circular debt, the chronic build-up of unpaid bills across the electricity supply chain, has for more than a decade crippled Pakistan’s power system, driven by poor bill recovery, high line losses, tariff shortfalls and expensive financing costs.
Successive governments have struggled to contain the debt pile, which has strained public finances and remained a key point of friction in bailout talks with the International Monetary Fund.
“Delighted to announce the successful completion of PKR 659.6 billion PHL settlements ... through capital markets which is Pakistan’s largest-ever debt market transaction,” Power Minister Awais Leghari said on X, referring to the settlement of Power Holding Limited liabilities.
PHL is a government-owned entity that borrowed heavily over the years to finance the power sector.
